What is a Real Estate Appraisal and How Does it Work in Illinois


Real estate appraisals are an essential part of buying, selling, and refinancing properties.

A real estate appraisal is a professional assessment of a property’s market value. Conducted by a licensed or certified appraiser, it serves as an objective estimate of a property’s worth at a given time based on its condition, location, and characteristics, as well as comparable property sales in the area. The appraisal process is crucial in various real estate transactions, including buying, selling, and refinancing properties. It ensures that the price agreed upon by buyers and sellers reflects the true market value, and it helps lenders confirm that they are not lending more money than the property is worth, minimizing their financial risk. Appraisals are also used for tax assessments, estate planning, and in legal disputes involving property.

Here are some common questions people often have about real estate appraisals:

1. What is a real estate appraisal

An appraisal is an unbiased professional opinion of a home’s value. It is used whenever a mortgage is involved in buying, refinancing, or selling a property to ensure the amount of money requested by the borrower is appropriate.

2. Why is an appraisal necessary?

Lenders require appraisals to ensure the property serves as adequate collateral for a loan. It protects the lender from issuing a loan that exceeds the property’s value, which could be a financial risk if the borrower defaults.

3. Who performs the appraisal?

A qualified appraiser who has undergone certification and training conducts the appraisal. They are typically independent contractors, not directly affiliated with the lender, to maintain objectivity.

4. How is the appraisal determined?

Appraisers use several factors to evaluate a property’s value, including recent sales of similar properties, location, condition of the property, and current market trends.

5. What does the appraiser look for?

The appraiser examines both the interior and exterior of the home. They look for the overall condition of the property, any upgrades or improvements that have been made, the functionality of the layout, and features that could affect the property’s value, like a swimming pool or energy-efficient features.

6. How long does an appraisal take?

The physical inspection of the home usually takes a few hours, but the entire appraisal process, from scheduling to report completion, can take a few days to a few weeks depending on the availability of data and the complexity of the appraisal.

7. What if the appraisal is lower than the sales price?

If an appraisal comes in lower than the sales price in a purchase transaction, the buyer and seller must either renegotiate the price, the buyer can make up the difference in cash, or the buyer can choose to cancel the transaction if a contingency was included in the contract.

8. Can I dispute a low appraisal?

Yes, if you believe the appraisal is inaccurately low, you can appeal the appraisal by providing additional information such as overlooked comparable sales.

9. Does the appraised value affect property taxes?

No, appraisals for mortgage purposes are separate from assessments used to calculate property taxes. Local government agencies determine property taxes based on assessments which can differ from an appraisal.

10.Can I get a copy of the appraisal?

Yes, under the Equal Credit Opportunity Act (ECOA), borrowers have the right to receive a copy of their home appraisal report.

Understanding these aspects can help buyers, sellers, and owners navigate the complexities of real estate transactions with more confidence.

Navigating Low Appraisals: What to Do When Your Appraisal is Lower Than Your Buy Price

When you’re in the process of selling your home, few things can be as stressful as receiving an appraisal that’s lower than your agreed selling price. This situation can complicate negotiations, potentially derail financing for your buyer, and might even result in a canceled deal. But don’t worry—Tony Buys Homes has strategies and solutions to help you navigate this challenging scenario.

Understanding the Impact of a Low Appraisal

A low appraisal means that the estimated market value of your home is less than the price a buyer has agreed to pay. This can happen for various reasons such as recent market fluctuations, an appraiser’s lack of local market knowledge, or simply features in your home being unique compared to recent sales in your area.

For buyers relying on financing, lenders typically offer a loan based on the lower of the sale price or the appraised value. If the appraisal comes in low, it could leave your buyer scrambling to cover the difference, renegotiate the price, or, in worst-case scenarios, back out of the purchase altogether.

Your Options with a Low Appraisal

When faced with a low appraisal, you have several options:

  1. Appeal or Request a Second Appraisal: Sometimes, appraisals can be contested, especially if there were errors in the appraisal process or if the appraiser overlooked new or relevant data about your property or neighborhood.
  2. Adjust the Selling Price: If the buyer is unable to secure additional funding, renegotiating the selling price might be necessary to keep the transaction moving forward.
  3. Buyer Makes Up the Difference: If the buyer is willing and able, they can pay the difference between the loan amount and the purchase price out of pocket.
  4. Split the Difference: Another common solution is for the buyer and seller to meet in the middle, with the seller lowering the price slightly and the buyer contributing more cash at closing.

How Tony Buys Homes Can Help

If renegotiating or waiting for another appraisal doesn’t sound appealing, We Buy Houses Chicago offers an alternative that might just be the perfect solution for you. Tony Buys Homes purchases homes directly for cash, which means:

  • No Need for Traditional Financing: Since we don’t rely on bank financing, low appraisals do not impact our ability to purchase your home.
  • Quick Closings: Without the need for mortgage approvals or traditional loan processes, we can close on your home quickly, often within days if necessary.
  • As-Is Purchases: We buy homes in any condition, so you won’t need to worry about making repairs or improvements to boost your home’s appraised value.
  • Eliminate Uncertainty: You won’t have to deal with the stress of whether a buyer can come up with additional funds or if a deal will fall through because of appraisal issues.

Facing a low appraisal can be frustrating, but it doesn’t have to end your home selling journey. With Tony Buys Homes, you can bypass the complications of traditional home selling processes. Contact us today to see how we can help you achieve a straightforward, stress-free sale, regardless of your home’s appraised value.