Getting Familiar With the Legal Process of Home Appraisals in Illinois
By Ronak Desai and Nicholas Ollero, Attorneys at Parikh Law Group
Whether you’re purchasing your first home in Chicago or selling a long-standing family residence in rural Illinois, the process can seem long including many steps required for closing. A home appraisal may be one of those required steps when a transaction includes the purchaser obtaining financing, and for some can present as the most nerve-wracking. Understanding the legal procedure and purpose of home appraisals in Illinois, however, can make the process less intimidating.
What Are Home Appraisals?
A home appraisal is an unbiased estimate of the fair market value of a property. Conducted by a certified or licensed professional, the home appraisal process involves an inspection of the property and a comparison to similar comparable homes in the area. The final appraisal report provides a value that lenders will use to ensure that the mortgage loan amount is appropriate.
Home Appraisal Laws in IL
In Illinois, as in the rest of the U.S., appraisers must comply with the Uniform Standards of Professional Appraisal Practice (USPAP). These standards ensure that appraisals are impartial, objective, and do not mislead or misrepresent the home’s value. Illinois also requires appraisers themselves to be state-certified or licensed, ensuring that they have the necessary education, training, and experience to perform home appraisals.
Preparing for a Home Appraisal
Preparing your home for an appraisal is much like getting it ready for a potential buyer’s viewing, with some extra considerations. It is not just about aesthetics but about maximizing your home’s perceived value.
Here are some specific steps you can take:
- Clean and Tidy: First impressions do count. It is highly advisable to ensure your home is clean and tidy both inside and out. A well-maintained home gives the impression that the property is well cared for, which can positively influence the appraiser’s perception.
- Complete Necessary Repairs: Address any outstanding repairs, no matter how minor they might seem. By fixing these issues, you can avoid creating a negative impression or having a minor defect impact your home’s value.
- Highlight Improvements: If you’ve made any improvements to your home, such as a kitchen renovation, a new roof, or a bathroom update, make sure the appraiser is aware of those. Compile a list of upgrades, including the date and cost for each. This could help increase the overall appraisal value, as these types of improvements often add value to a home.
- Curb Appeal: Don’t overlook the exterior of your home. Freshen up your landscaping, power wash the exterior, and make sure any outdoor living spaces are clean and inviting, as it can influence the appraised value of your home.
- Provide Comparables: If you’re aware of recent sales of comparable properties in your area that have sold for a good price, provide this information to the appraiser. They may not be aware of all recent sales, especially if those took place very recently.
- Stay Neutral: While you may love your bold wallpaper or bright paint, neutral colors generally appeal to a wider audience. Prior to an appraisal, you may want to consider a simple paint switch-out to create a more neutral environment.
Remember, while the appraiser is an impartial professional, they are also humans whose assessments include some degree of aesthetic considerations. A well-presented, cared-for home will serve in your favor.
Process of Home Appraisals in Illinois
Whether you’re buying or selling, the home appraisal process often begins once a sale price is agreed upon. The appraisal is ordered by the lender after a buyer has submitted their application and is under review, which ordinarily takes place about 2-3 weeks after submission. The timeline can vary depending on the type of loan and the competence of the lender. The home appraisal process involves several steps which include ordering and scheduling an appraiser, performing an on-site inspection, appraiser preparing a detailed report, and the review and approval of the appraisal report conducted by the lender/underwriter. A more specific breakdown is as follows:
Physical Inspection
During the physical inspection, the appraiser evaluates the home’s condition and its features, such as square footage, number of bedrooms and bathrooms, and any upgrades or repairs needed or already completed.
Market Research and Analysis
Next, the appraiser conducts market research, comparing the home to similar properties in the local real estate market. They will consider recent sales, current listings, and historical trends for the neighborhood and larger area.
Compilation of the Appraisal Report
The appraiser then compiles the information gathered during their in-person inspection and market research into a comprehensive appraisal report, which includes the estimated value of the property.
Review and Use the Appraisal Report
The lender will receive a copy and review the appraisal report. If the appraised value is less than the agreed upon sale price, it may affect the loan amount or other terms of the contract.
Challenging a Home Appraisal
If the appraised value comes in lower than expected, you can challenge it. You can review the report for errors, provide additional information about comparable homes, or hire a different appraiser for a second opinion. However, a lower-than-expected appraised value could work in your favor if the property is overpriced, provided that your sales contract contains an appraisal contingency. In the event there is an appraisal contingency, the result of an appraisal lower than the sales price opens the door to renegotiating what you are paying for the property. In good faith both parties can try to come to an agreement on a new price, but if no agreement can be made then either party may terminate. A home appraisal surely can provide a fair market value, but a contingency such as this can also be your biggest protection for overpaying. The Illinois real estate attorneys at Parikh Law Group can provide guidance to you during this process.
Look for a Real Estate Attorney from Parikh Law Group to Help
Navigating the complexities of the home appraisals process can be challenging. The experienced real estate attorneys at Parikh Law Group can help. We provide valuable advice, assist in the appraisal process, and even challenge an appraisal on your behalf if necessary.
Understanding the legal process of home appraisals in Illinois can make your real estate transaction smoother and less stressful. By partnering with the trusted real estate attorneys at Parikh Law Group, you can ensure your interests are well-protected throughout the process. Please visit our website at www.plgfirm.com for more information.