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What Are My Options If My Appraisal Comes in Low?

When you're buying a home and financing the purchase through a mortgage lender, a requirement is to obtain an appraisal of the property before the lender will approve the purchase. Typically, an appraisal occurs after the Attorney Review period is completed, generally 2-3 weeks into the contract process. 

While you don't select the appraiser that comes to visit the property, the lender you've decided to work with will send someone on your behalf. The appraiser will tour the home, taking photos and measurements, and then use this data to research comparable sales in the area to determine the value of the home you're buying. FYI, your Realtor should have run all the comparable sales in the past 12 months within the area / building / subdivision so the data should be the same, and if your Realtor is concerned about the appraisal, this should be discussed before the offer is written.

If the appraiser determines that the value of the home is equal to or higher than your agreed upon purchase price, then you're able to proceed through the contract to the next stage. 

However, occasionally the appraisal comes in low, and it's important to know your options if this is to occur, since the bank will only loan you off of the appraised value, and the contract price. 

Option 1: Negotiate with the seller. Have your Realtor or Attorney reach out to the seller and let them know that the appraisal came in under value and see if they are willing to lower the purchase price. Pre-written into the Illinois Real Estate Contract is an appraisal contingency that protects you in the event an appraisal comes in low. However, in a hot market, the seller may feel confident they'll achieve full value of their asking price from another buyer, so make sure you're comfortable with this request. In normal times, seller and buyers usually split the difference in this scenario.

Option 2: Cover the difference out of pocket. If the home appraised lower than the agreed purchase price, and you don't mind covering the difference, you're allowed to increase your down payment to cover any shortage. Not ideal, but if the seller won't budge in a hot area, remember that your monthly payment will go down if you're putting more of your personal finances down.

Option 3: When an appraisal comes back low, 75% of the time there are errors. Request a review of the appraisal. You can work with your Real Estate Agent to point out inaccuracies in the appraisal report that cause the value to come in low. Maybe the appraiser used bad comparables, or overlooked properties that would have helped the property obtain full value. Your Realtor can help send a report as to why the appraisal should be looked at again. Appraisers usually stick by their appraisals, no matter what the facts, but still worth a try - changes do happen sometimes.

Option 4: Start over with a new lender. If you send a report showing inaccuracies in the initial appraisal and the appraiser won't budge, but you can't use option 1 or 2, and don't want to lose the home - start over and try again. Some lenders will allow you to stick with them and order a new appraisal, however starting over could ensure a clean slate and a better, more accurate appraisal. You'll have to pay out of pocket for the new appraisal, but it could save you thousands in increased down payment funds. Last year we saw a home in Arlington Heights list for $580k, appraise for $480k, then had another appraisal come back 2 weeks later at $580k. True story. Also, we saw recently saw one where the contract price was $420k, it appraised for $400k. 2 days after receipt of that appraisal, the exact home closed down the street for $430k, but the appraiser wouldn't use it because it was after the report was issued.  Doesn't make sense, welcome to Real Estate craziness.  2nd appraisal was geared up but the buyer decided to put more money down (option 2), but if another appraisal had been done, it would have met value for sure.

Option 5: Walk away. If the seller won't negotiate with you, you can't pay out of pocket, the appraisal report is solid with no inaccuracies, then maybe it's best to just walk away and start over with a new property. As mentioned, there is an appraisal contingency in the contract that will protect you from losing Earnest Money when an appraisal comes in low. You'll lose the time and money you spent trying to buy the property, but if you lost confidence over the appraisal, it may not be a bad thing to look for something new.

Bikes and Music News
Wow - what a whirlwind these last couple months have been! We partnered with two local organizations,  Home of the Sparrow and RefugeeONE, in hopes of obtaining some bike donations to give to their families in need. We were overwhelmed by the amount of donations we received! Nearly 100 bikes were given to us in a matter of weeks. We are still in need of about 30 more bikes to fulfill our goal, so let us know if you'd like to donate! 

A BIG Thank You to Crank Revolution and Never Ending Cycles for all of their hard work tuning up and repairing bikes to ensure they would be safe for kids to ride. We could not have done it without them!! 

We also had an amazing turn out at St James Elementary School that did a fundraising week for us. We received 23 bikes in one day, plus a generous $1000 donation. We are so grateful! 

FUN-raiser through August 20th! To keep the bikes moving, we are holding a “Summer Fun-Raiser” donation drive now through August 20, with the goal of raising $25,000. It will be capped off with a group bike ride at Paul Douglas Preserve in Hoffman Estates on August 20, from 10 a.m. to 2 p.m. During the same hours, Crank Revolution Bike Shop will host a cookout with food, refreshments, 50/50 raffle, music and games. They are located across the street from the preserve at 1636 W. Algonquin Road. We invite you to join us!

Visit or email for more info or to schedule a bike (or instrument) pick up!
Interesting Statistics
This month we wanted to see how the market has been going in the popular Northwest suburb of Rolling Meadows. The population in this city was 24,000 in 2020, it is rich with parks, and fun for all ages. It's also home to one of our favorite restaurants - Rep's Place.
Interestingly, sales prices in Rolling Meadows look like a stock market graph. Up and down several times a year, but inching higher with time. It's a popular option for buyers looking to spend under $300K, but will prices continue rising? 
As we've seen in other markets, the inventory from 2019 to present has been on a decline. However, in Rolling Meadows that didn't seem to impact the inventory as much as other areas. In 2019, the trajectory followed the standard trend - more homes on the market in the Spring, less in the fall. However, once we entered 2020, there was still a decent amount of homes for sale. Even when Covid first hit, there's a small spike, then a small drop, and then a bigger spike. Whereas most areas had a consistent drop in homes available, Rolling Meadows has seen more ups and downs. Things did begin to drop off significantly in the latter half of 2021, recovering for a bit until peaking in late summer, and then that sharper decline through present day that's become all too familiar. What is impacting inventory this way?
So one would think that with home inventory being a little more steady, we'd see a similar graph looking at homes under contract but no, another example of a wonky market. Though the peaks and dips do somewhat follow the previous graph, we're still seeing the amount of homes going under contract fall more drastically than the inventory was giving. So, while we did see a lot of competition for homes in the Northwest suburbs these last couple of years, the demand for homes in this particular area don't seem to follow "typical" real estate trends. The biggest spike happened in late 2021, a time where we generally see a fall off of contracts. And just as quickly as that number went up, it crashed back down until a recovery in 2022. Definitely one of the more interesting neighborhoods we've studied so far! 
Kevin's Korner

Why Are Home Buyers Bidding Over Asking Price?

​​Buying a home has traditionally involved negotiating the sale price down from the seller’s asking price. Recently, however, the opposite has become common. Thanks to the hot real estate market, as many as half of all home sales now close for more than asking price. Here’s why this is occurring and how you can decide what to bid when buying a home.

Why is bidding over the asking price so common?

The main reason bidding above the asking price is occurring so often is because the home buying market has become so competitive. The inventory of available homes for sale in many regions is low, meaning homebuyers must often compete and outbid each other to purchase the homes they want. That often means bids will go above the asking prices.

In this environment, many home sellers are purposely underpricing their homes to encourage multiple bids. This helps sellers to sell their homes quicker, and the multiple-bid process automatically helps them arrive at competitive sale prices for their properties.

This has become business as usual for real estate transactions in many parts of America, so if you’re planning to buy a home, you should prepare to bid above asking price if necessary.

How much over asking price should you bid?

Here are the main factors that will determine how high you should bid on a home:

  • How much can you afford? Naturally, you shouldn’t bid more than you can afford to pay for a home, which is why getting pre-approved for your mortgage to set your home buying budget is an important first step.

  • Is the bid above or below what the home is worth? Even in a competitive market, there are usually other options, and your real estate agent can help you determine if a necessary bid is more than a home is worth.

  • How competitive is your offer? Price isn’t the only measure of an offer’s competitiveness – if you’re bidding against a cash offer or one with fewer contingencies, you may need to increase your bid by a larger amount to stay competitive.

  • Could you cover the difference of an appraisal gap? If you attempt to buy a home for more than its appraised value (a situation known as an appraisal gap), you may need to make up the difference in cash or explore other appraisal gap solutions with your loan officer.

  • How much do you want the home? Ultimately, how much a home is worth paying for is up to you, which means you may want to bid more for a home you love.


Paying more than asking price doesn’t mean now is a bad time to buy a home. To the contrary, waiting to buy a home could cost you more, and there are still many valuable benefits to homeownership. If you’re planning to buy a home, get in touch to get pre-approved for your home financing.

Information provided by:
Kevin P. Koykar, CFP®, ChFC®
Senior Loan Officer
C: 224-639-5100

We couldn't be happier with our experience having Nina as our realtor. There were some twists and turns in the process, but Nina was always there to make things as smooth as possible and assuage our concerns every step of the way. We really appreciated all the extra handholding and explanation that came with going with an agent who specifically focuses on first time homebuyers, and never felt like a question was too silly to ask. Thanks to Nina, Starting Point Realty, and their partners, we are proud owners of our dream condo in Chicago and feel prepared for anything homeownership has to throw at us in the future!

- Liz and Ross

**Liz hilariously photo-shopped her partner into her closing photo due to him not being able to attend. Well done, Liz!!**
Featured Listings
Home Buyer Seminars Coming in July! 
Home Seller Seminars Coming Soon! 
Homeowners! Have you thought about selling, but don’t want to call an agent? Starting in August, our free 7-Step Home Selling Seminar gives you the info you need without any obligation. No pressure, no sales pitches. Hosted by StartingPoint Realty, bringing real estate seminars to Chicagoland since 2004. RSVP here! 
Ryan's Review 
Severance - Apple TV
You have Michael Mann with his crime-masculine themes set in city slick backdrops, or Martin Scorsese's violent gangster flicks set in New York / Las Vegas, Ben Stiller's talent swims in the pool of dark comedy. Not an easy genre, as it's often attempted, but rarely succeeds.

Stiller wins with Severance. Can I call Severance a comedy? Not in the traditional sense, it's not The Cable Guy, but there are some comedic undertones to it. I can't call it Sci-Fi, so I'll stick with dark comedy. Severance is about people, work and society. A large company named Lumon (think Google or Apple) developed a technology where they can make an implant in your brain that creates two different realities - one where you are at work and one where you are not. 

There are 9 episodes, starring Adam Scott as the main character (Mark), who is awesome. And in the show, Mark enters an elevator at this company, and when he goes up, his work reality is activated - wherein he has no memories or knowledge of the outside world. On the elevator down from the office, he exits as the person he is outside of this building, having no memories or recollection of what has happened inside. Neither side know what the other is doing. 

Why would someone want to do this? Well, Mark experienced a traumatic event that caused him to want a severance, or a reprieve from those thoughts and memories. Because again, when he's inside, he has no knowledge of past or present personal history, so there's an appeal there, but is it moral?

And this is why I wanted to watch the show. As a Real Estate Agent, we don't have an 'off' button. The line is blurred all the time from personal to work life, it's very difficult to cut the cord so I was curious as to how the show dealt with work / life / society.  Well, it definitely took a hard right in terms of me relating to the plot, but that's ok. After all, it's not all about me. 

I also had friends and family that decided to watch Severance once it released, and they would talk about how slow it is. Several folks gave up on it. So I was thinking I would get to it at some point, just not a big rush. But it was clients of mine who bought a home in Glen Ellyn a couple of months ago and while talking about streaming series and what's good, they couldn't stop talking about Severance. In fact, the wife in the couple said she was going to watch it again! So now I had watch it. And very true to to the stories I received from the early watchers of the show, it took a little while to get going. I'd find myself picking up my phone while watching the first few episodes, then I'd have to rewind the five minutes I missed while staring at my phone, it was a bit maddening. I'd say the first 1/3 is slower, in the middle it picks up, and then the last few episodes you're immersed in it. By the last episode, instead of picking up my phone, I would have to pause the show a few times to fill up my glass of wine because I was so on edge. So big bravo to Ben Stiller for executing the slow-burn, the taking of time to build things up - not often seen given the instant gratification cycle we seem to be fed through our phones, etc.

There's also not a ton of characters in the show, but the ones that are - wow. We're talking John Turturro, Christopher Walken, Patricia Arquette along with Adam Scott. Some heavy hitters, and the ones I didn't recognize were amazing! I think of a Chistopher Walken reading this script, and shouting, 'are you kidding me, I'm in'.

So without giving up too much more than I already did, I would say of all the streaming series that I've watched in the last few years, since Ted Lasso, Severance might be the best. Just got to get through the first few episodes. You'll think you understand what's happening and what's going to happen, and that's where Stiller will mess with you a bit. He'll let you go down that route to branch into your theories, but that's not quite how it's going to go. But have fun with it and let me know what you think! 'Defiant Jazz', I really wish I could dance like that guy.
Client Appreciation Party! 
We have scheduled our 2022 Client Appreciation Party for Saturday, August 13th. We will be hanging with all of our past clients on the lawn at Ravinia to see the bands Dispatch, OAR, and G-Love! If you are a past client of ours, you should have received an invitation. If you haven't, please check your Spam inbox and/or email See you there!! 
Thanks for Reading! 
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