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All real estate contracts have contingencies. The big ones are Attorney and Home Inspections.

The Attorney is for the property legal issues. The Home inspection is for the property physical issues.

There should be another contingence,"the property value contingency". The smart buyers will have a "value contingency"

The value contingency is a statement that should be inserted into the purchase contract, "The property sales price will not exceed the appraisal value opinion"

The buyer assumes the lender's appraisal will be the true value market value. In most cases the lender's appraisal value opinion will be close/and or the same as the sales price.

A smart buyer will get their own appraisal. WHY? to save money. Assuming the Appraisal fee is $350.00. How much can you save with your own appraisal?

You want to purchase a 2 bedroom, 2 bath unit in a high-rise building located in the Near North Side MLS 8008. Price Range $350,000 - $399,900. How much should you pay for the unit?

2 bedroom 2 bath high rise sales in MLS 8008, in the past 2 years.

57 sales, 09/2006 -09/2007, $350,000- $398,500, median $375,000, avg $373,975, dom 115.

46 sales, 09/2007 -09/2008, $353,000- $399,000, median $375,000, avg $376,300, dom 135.

20 sales, 09/2007 -03/2008, $353,000- $399,000, median $374,950, avg $376,300, dom 135.

27 sales, 03/2008 -09/2008, $354,000- $395,000, median $377,500, avg $378,054, dom 127

12 sales, 06/2008 -09/2008, $354,000- $395,000, median $376,208, avg $376,208, dom 161

Based on the above data for a 2 bedroom, 2 bath, high rise unit in the  subject market there has been no median increase in value the past year. But.

North Side market attached sales

2739 sales 09/07 -09/08, $105,000 - $5,990,000, median $420,000, avg $583,092 dom 119.

3096 sales, 09/06 -09/07, $111,900 - $8,275,000, median $380,233, avg $546,032, dom 118l

The median market one year increase in value was $39,767, and/ or 10.46%

Will the lenders's appraisal value reflect a increase in value of $10.46% in the past year? When there was no increase in value for a 2 bedroom, 2 bath, high rise unit. How would the buyer know the true market value unless they got their own appraisal. With the "property value contingence" a buyer will save a lot more than the appraisal fee cost.

Question to ask the Appraiser:

1. Do you research the market data? For the subject property, and similar units. 2.The subject market values for the past two years, the 6 months prior and present values, and the past 3 months values. 3. Do you explain the market data with the low, high, median, average values, market times, and trends.

Jack Schlenk

773 685,800

jack127@att.net

web site, WcuAppraisals.com