Waiting to find out the results of a home appraisal can be stressful for homeowners and buyers alike. As a homeowner, you might need your home to appraise at a specific value before you decide to sell or refinance. As a first-time homebuyer, the appraisal could impact whether or not you qualify for a mortgage in Oakbrook Terrace, IL. The truth is, home appraisals can have a significant impact on your mortgage, the final terms of your refinance, or even negotiations between a buyer and seller.
In short, a home appraisal determines the fair market value for a home. A licensed home appraiser evaluates the home as a neutral third party by researching similar neighborhood homes. After assessing the home, the appraiser submits a detailed report.
Sounds easy enough, depending on the outcome. But if a home appraisal reports a much higher or lower value than anticipated, it can cause added stress for everyone. For example, the buyer and seller could restart negotiations, a buyer could walk away, or the loan could fall through.
The good news is that a home appraisal in Oakbrook Terrace can be less stressful when you know what to expect.
Know What to Expect Before You Get a Home Appraisal in Oakbrook Terrace, IL
Let’s look at the appraisal process, how much it might cost, and how home appraisals work.
You might be surprised to find out that some refinance loans don’t require an appraisal at all. If you’d like to refinance without an appraisal, check out the FHA streamline and the VA IRRRL to see if you qualify.
Related: Talk with a mortgage advisor from the Claudio Prunotto Team about a no-cost refinance
How it Works: What is a Home Appraisal?
In basic terms, a home appraisal determines the fair market value for a home. This is helpful for the buyer, seller, and lender. For buyers, a home appraisal ensures they’re paying a fair price. For sellers, it verifies that their home is priced competitively. And for lenders, an appraisal offers proof that a home is adequately valued to approve a home loan.
Certified home appraisers serve as neutral parties, so they don’t represent the buyer, seller, realtor, or lender. Simply put, an appraiser will evaluate comparable homes in the area along with recent home sales in Oakbrook Terrace and write up a detailed report to confirm their findings.
Since the purpose of an appraisal is to set the fair market value of a home, both the buyer and seller have a unique interest in the outcome. Sometimes when an appraisal comes in much higher or lower than anticipated, the buyer or seller might request a new appraisal by appeal. But this is not common in practice.
Once the appraisal report is received, all interested parties take the appraisal as the current fair market value of the home.
Related: Access our FREE Homebuyer’s Guide
Common Questions About Home Appraisals
Q1: Are appraisals required for every home purchase in Oakbrook Terrace, IL?
No. A home appraisal is necessary in most cases, but not always.
For example, if you’re buying a home with an all-cash offer in a competitive housing market, you can skip the appraisal as long as the seller is willing to do the same.
However, if you need a mortgage to buy a home in Oakbrook Terrace, the lender will require an appraisal. The home appraisal will verify that the home’s value is comparable to similar homes in the area. In addition, since your home is the collateral for a mortgage, lenders look to the home appraisal to confirm its fair market value.
If you’re refinancing, you might be eligible for a no-appraisal refinance, saving time and money. Talk to a mortgage advisor from the Claudio Prunotto Team to see if you qualify.
Q2: Is an appraisal contingency a good idea?
Sometimes. If you’re the buyer, it can be a good idea to include an appraisal contingency in the offer. An appraisal contingency lets you walk away from the home purchase if the appraisal comes in too low.
However, if there are multiple offers and low housing inventory, a seller may choose a buyer who has fewer contingencies. In this case, an appraisal contingency might protect you as the buyer, but you could lose the house in negotiations.
Related: Top 5 Most Popular Home Loans for First-Time Homebuyers in Oakbrook Terrace
Q3: Is there a difference between home inspections and home appraisals?
Yes. A home inspection provides an in-depth evaluation of the current condition of a home.
A home inspector will do a detailed walk-thru and look for problems that might need repair or uncover areas that might need attention. For example, they’ll check the roof and the home’s foundation; they may test the furnace and outlets, along with the plumbing system, and see if the water heater is installed correctly. Often, the results of a home inspection lead to further negotiations between the buyer and seller. Especially if there are costly repairs needed.
An appraiser provides a final report to determine the fair market value by comparing similar homes in Oakbrook Terrace, but they don’t check the home’s condition in detail. For example, an appraiser will note visible structural problems (for example, a falling roof or lack of plumbing), but not minor details. Instead, appraisers research comparable homes nearby that have sold recently using standard criteria. For example, they’ll compare homes with a similar number of bedrooms, bathrooms, square footage, acreage, and other major elements such as a backyard pool or ADU.
Q4: How much does it cost to get a home appraisal in Oakbrook Terrace, IL?
In general, a home appraisal for a single-family home will cost $300-$500. Most lenders require an appraisal before the loan closes, and typically the buyer pays. However, if the housing market leans in favor of the buyer, sometimes the seller will pay this fee.
Worth noting, the appraisal cost can vary widely depending on a few factors: the size of the property, location, and total acreage. For example, properties located in rural areas with additional acreage can cost more since the appraiser will need to survey the property’s boundary lines.
Related: Find Out the Truth About Closing Costs and No-Closing-Cost Loans
The home appraisal process can be a lot less stressful when you know what to expect.
In short, a home appraisal determines the fair market value of your home. For this reason, a home appraisal can have a significant impact on your mortgage, the final terms of your refinance, and negotiations between a buyer and seller. Of course, you can always appeal the appraisal, though this isn’t common practice.
The good news is that even when a home appraisal in Oakbrook Terrace is different than expected, both the buyer and seller have options. As the buyer, you could walk away, bring more money to the table, or renegotiate with the seller. As the seller, talk with your realtor, see what they recommend, and decide if you’re willing to renegotiate the sales price.
Research comparable homes in Oakbrook Terrace, IL, and talk with your realtor about what to expect. If you’re thinking about buying a home or refinancing, we’d love to partner with you in the process. Connecting with a mortgage advisor from the Claudio Prunotto Team can reduce stress and save you money in the long run. We’d love to help.