LOW CHICAGO HOMES-FOR-SALE INVENTORY ADDS QUESTION MARK TO HIGH-ENOUGH APPRAISALS
LOW CHICAGO HOMES-FOR-SALE INVENTORY ADDS QUESTION MARK TO HIGH-ENOUGH APPRAISALS
IN CHICAGO MORE UNDER-APPRAISALS RESULTING FROM LOWER INVENTORY LEVELS IN MANY NEIGHBORHOODS!
Having a Home or Condo Pending Sale Under-Appraise is HEARTBREAKING! Seller and Buyer are disappointed because such an under-valuation makes a scuttled deal likely. Sellers may have to reduce their sales price and Buyers find they begin with less equity than they anticipated.
The "Science" of Home Valuation is based not only on Comparable Property Data found on the Chicago Multiple Listing Service. There is also the "Subjective" component of analyzing hyper-local trends not yet reflected in Sold Property Data. Relevant Issues include whether the property was sold in multiple offers as well as whether the Subject Property offers the less-quantifiable benefits of a preferred location a better school or more appealing improvements.
As reported by Chicago Tribune Real Estate Writer Mary Ellen Podmolik last month inventory across Chicago fell nearly 6% earlier this year versus 2014 levels. Meanwhile median Chicago Home Prices increased far more modestly than in other areas of the U.S.
Head Appraiser Chip Wagner of the A.L. Wagner Appraisal Group in Naperville IL suggests the number of under-appraisals today is lower than it was only a couple of years ago. In February statistically the City of Chicago had only three of four months of available inventory – somewhat tighter than a commonly-acceptable "stable market level" of about six months of homes and condos available for sale. Although one might expect lower demand would drive up prices fewer comparable properties offer less justification of a higher selling price. Hence some properties have under-appraised.
Another Appraiser Michael Hobbs from PahRoo Appraisal and Consultancy used additional information from other Listing Brokers and also looked at how quickly other properties were going under contract nearby. He found the specific block in which a Chicago Bucktown Row House was located was hot and highly desirable. He adjusted his appraisal upward based on this somewhat-subjective information but still somewhat lower than the sales price per contract. The Seller had to reduce his sales price in order to keep their deal together.
Within Our Team several of the appraisers for our listings have asked for additional data on the local market before they completed their Appraisal Report. However so far in 2015 no under-appraisals on anything we have sold.
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DEAN MOSS & DEAN’S TEAM CHICAGO
