Inspections and appraisals can be a huge part of the process when selling your house in Chicago. Real estate transactions can be quite complicated, so it is important to understand the process in order to make the best financial decisions. Read on to find out what home sellers need to know about inspections and appraisals in Chicago.
Home sellers need to know inspections and appraisals are an intricate part of traditional real estate contracts. These contracts typically have an inspection contingency or due diligence contingency. This allows protection for buyers, who are given a specific time period, such as seven days for the inspection to be completed. Should there be any issues found with the in Chicago, the options for both buyer and seller are clearly outlined in the contract. Depending on how the contingency clause was written, the outcome of the inspection could cause closings to be delayed, or even cause deals to fall through. Failure to have this clause in a contract could mean that the buyer, having decided not to complete the purchase based on the outcome of the inspection, would lose their earnest money deposit, which shows interest and good faith to make the purchase.
Much news is brought to light for homeowners from having inspections and appraisals. These are typical processes of real estate transactions. Home inspections focus on the condition of the property structurally, as well as the systems which keep the home a comfortable and enjoyable property. This includes items such as air conditioning, heating, plumbing, electrical systems, water damage, termites, and the condition of the roof and foundation. The inspector will prepare a report for the buyers, to make them aware of any issues that were found. Depending on the conditions in the contract, after a negative report, buyers may have the option to request a time period for a second inspection, or even request a deduction on the price, to make the repairs themselves, the cost for the repairs is likely to fall on the seller’s head. It is wise to contact three professionals for estimates to get a realistic number as well as a timeline for completion. These out of pocket expenses can quite literally run into tens of thousands of dollars, depending on the severity of the problems found in the inspection.
Inspections and appraisals also bring into focus the actual current market value of the home, given all possible variables. While the inspection focuses on issues with the home, the appraisal is completed by taking several variables into account, including comparing properties that have most recently sold, that are most likely, and most near the subject property. Appraisers have predetermined values for bedrooms, bathrooms, and the like. They will add value to a property with more features than the comparable properties, or subtract from the subject property value for what may be lacking, such as having only a one-car garage, when those nearest all have two-car garages. Mortgage lenders necessarily require the appraisal to meet the loan-to-value (LTV) ratio. Basically, the mortgage amount is divided by the appraised value. Lenders use this measurement as a guideline, the lower the resulting number, the lower the risk on the loan. Should the loan-to-value be a higher number, the lender may require mortgage insurance to be purchased as well. Wise buyers will ensure that there is a contingency clause in the contract based upon the appraisal results as well.
Failing to understand the impact of inspections and appraisals in Chicago can lead to disastrous mistakes which can end up costing a home seller valuable time and a great deal of money. Sadly, buyers may find their house isn’t worth what they thought only after the inspection and appraisal have been completed. With these and many other clauses that can be in place to protect buyers, problems may cause sales to fall through because the lender will not approve the loan. The buyer may ask the seller to pay for repairs, out of pocket, before closing or to deduct the value of the repairs from the price of the home and renegotiate a contract. All the while, the clock keeps ticking and the seller is now paying to hold the property longer than expected, meaning that in reality, they are losing even more of the valuable equity that had been built in the home, and actually making even less on the sale.
Chicago Home Buyers makes real estate transactions easy, even for first-time buyers or sellers, without any of the problems that accompany inspections and appraisals in Chicago. At Chicago Home Buyers our network of professionals will lay out a plan to save valuable time and avoid what could potentially be thousands of dollars in repairs. A professional buyer’s purpose is to solve problems for buyers or sellers, so why not let a professional buyer, like those at Chicago Home Buyers, guide you step by step through the process? Send us a message or give us a call today to learn more! (312) 300-2043