Year-to-Date 2023 vs. 2022 * north shore market update
After a record-breaking 2021 and 2022, transaction activity on the North Shore is down year-to-date. However, with Months’ Supply of Inventory averaging just 1.7 months through the end of August, it continues to be a competitive market where homes are selling very quickly.
total transactions average sales price -24.7% -24.3% -3.6% +0.6% sales volume average market time
luxury opportunities
700 CRAB TREE FARM LANE, LAKE BLUFF, IL | $22,900,000 Andra O'Neill · 847.650.9093
364 74TH STREET, SOUTH HAVEN, MI | $5,999,000 Jackson Matson · 262.214.0240
what you need to know about appraisals
LOW INVENTORY AND HIGH PRICES HAVE COMPLICATED APPRAISALS ON THE NORTH SHORE
Appraisals have rarely been a concern for buyers and sellers on the North Shore, where home prices and transaction activity have always been relatively stable. However, lately appraisals have become a front-and-center issue on an increasing number of sales. That’s because historically low inventory has resulted in a lack of comparable sales or “comps.” And, because of intense competition for the limited number of homes, pricing in many areas continues to rise. The result is that appraisers can struggle to make the case for a certain price, which can hold up or even derail a transaction.
Here are a few things that both buyers and sellers should keep in mind regarding appraisals.
FOR SELLERS
FOR BUYERS
• Armed with Data: A good listing agent will know which comps an appraiser is likely to use and be ready to furnish off-market or recent transactions to supplement that data. Discuss the appraisal process with your agent to see if they think it will be a factor in your sale. • Appraisal Gap Clause: If you’re selling in a low-supply/high-demand area, it’s a good idea to include this clause in a contract, which stipulates that a buyer will move forward with the purchase even if the home doesn’t appraise at full price. • Contract Terms: It’s important for a seller to look at other terms beyond price, such as down payment. A higher down payment will generally cure most issues arising from a low appraisal. Cash offers will obviously negate the need for an appraisal.
• Play Your Hand: Low appraisals used to be an automatic invitation to renegotiate. In a highly competitive market, that strategy can backfire. The onus may be on you, the buyer, to find a workable solution. Otherwise, the seller may consider other offers. • Broker Cooperation: Similar to the first point for sellers, a buyer’s agent is also welcome to share comps with the listing agent if they think it will aid an appraisal. However, note that buyers and their agents almost never interact with an appraiser. • LTV & PMI: Just because a home doesn’t appraise doesn’t mean the bank won’t issue a loan. However, a low appraisal will increase the loan-to-value (LTV) ratio of the mortgage. In that case, a buyer may have to pay more private mortgage insurance (PMI) or accept other terms from the lender.
585 LONGWOOD AVENUE, GLENCOE $9,750,000 info@heritageluxury.com | 847.962.1200 HERITAGELUXURY.COM
*Source: BrokerMetrics / MRED LLC, North Shore residential sales (Evanston, Wilmette, Winnetka, Kenilworth, Glencoe, Highland Park, Lake Forest, Lake Bluff, Northfield, Northbrook, Glenview, Deerfield), 1/1/2023 - 9/12/2023 vs. 1/1/2022 - 9/12/2022
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