Selling a House for Cash in Chicagoland? Read This First!
You’ve seen the signs in sloppy penmanship written on yellow cardboard stapled to telephone poles advertising “Will buy your house for cash!” - but if you’re selling a house for Chicagoland, you better read this first. In recent years, perhaps you’ve noticed another trend: iBuyers. These are algorithms programmed by tech companies that make cash offers on homes that close in under a week. If you’re in Chicagoland, there are a lot of opportunities. Which is what makes it all the more confusing. So let’s take a moment to explain these various business models, and how you can sell your house fast.
Selling a House for Cash in Chicagoland - Fast
Before we jump into how one might move forward on selling a house for cash in Chicagoland, let’s first go through a brief history lesson. I promise, it isn’t as dull as it sounds!
Usually, investors who buy houses for cash and sell at a profit are not small time investors. In fact, a great analogy to selling a house for cash in Chicagoland to one of these types of investors is akin to trading your car to the dealership. Wanna sell a car? You sell it yourself. Perhaps you put a “For Sale” sign in the window or put an ad in the newspaper. Wanna sell your car fast? You’ll likely take it to the dealership and see if they’ll buy it or use it to trade-in for your next car.
All-cash home buyers tend to be either individuals or entities that buy your house outright. Like the car dealership, they don’t need any lender financing. Selling your home to a cash buyer helps you cut a lot of corners. For example, you won’t need to stage your home, show it to prospective buyers, or haggle over closing timelines. Although it’s pretty cut and dry, not every all-cash buyer has the same conditions in place. We can identify these buyers by breaking them down into categories.
1. House flippers
When you think of House Flippers, the couple of Fixer Upper fame come to mind. Or perhaps Vanilla Ice (yes, Ice Ice Baby changed careers and now flips homes). These folks tend to buy homes that are a bit rundown with the idea of fixing them up and selling at a profit.
2. iBuyers - a New Trend
These days, we see iBuyers. These are data-driven algorithms designed to purchase homes for all-cash. You may also recognize them as “instant buyers.” Both of these terms mean the same thing. Using an automated valuation model (AVMs), iBuyers make competitive offers on residential homes. Unlike fixer-uppers, these homes tend to be in better condition. Consequently, the typical iBuyer purchase makes less profit per flip. This group is working in volumes, purchasing many homes and turning them over fast.
When dealing with iBuyers, a home can close in a matter of days (once you accept the offer, that is!). iBuyers also tend to offer better pricing, in many cases up to 98% of fair market value. iBuyers are occupying more of the market share these days, hovering around 6% of home buyers.
3. Buy-and-hold Investors
Your typical buy-and-hold investor purchases a home and converts it into a rental property. Certain buy-and-hold investors may purchase properties with the goal of renting out for passive income. There are also investors, known as “institutional investors” who purchase a minimum of 10 rental properties per year. Well under 2% of homes are sold per year to such institutional investors.
As with iBuyers, home sellers will enjoy more flexible closing timelines, as well as better pricing than a house-flipper buyer.
Here’s What You Need to Know When Selling a House for Cash in Chicagoland
1. If you need a Fast Sale...
There are direct buyers who will purchase your house as-is. This option is great for those who know their home requires big repairs. Simply put the house on the market and say “as-is” - this is sort of a password for all-cash buyers. When they read “as-is” they know work will be required.
How much work is too much? That depends on the type of home, the price, and location. House-flippers are attracted to the most run-down, even downright gut jobs. Remember: they want a big profit and are willing to put in the work. iBuyers, on the other hand, aim for homes in better condition, however, minor scraps are okay. In the case of iBuyers, they’ll often send their own housing inspector to your home and will deduct anticipated repairs from the offer price. Still, when going with an iBuyer and selling a property “as-is” you’ll skip the hassle of handling the repairs yourself.
2. Avoid contingency clauses.
The nice thing about selling a house for cash in Chicagoland is that you can avoid contingency clauses. Contingencies are all the rage in housing contracts. Need a reminder of what a contingency clause is? Contingencies are “back out” clauses that protect buyers - they can be a big challenge to sellers. An example of the fine print of a contingency clause may include:
- Offer is only valid if the buyer’s current home sells within three months.
- Offer is only good if the inspection doesn’t turn up severe repairs.
- Even if the bank has approved it, the offer is only valid if the mortgage lender comes through.
See how contingency clauses may get in the way of selling your home? If you can sell to an all-cash investor, you skip this hurdle altogether. Nice!
3. Financing is no Longer an Issue
When you get banks involved, the home selling process gets drawn-out. At times, it can be excruciating as you wait for the buyer to get approval to borrow money from their bank. You have to move by the bank’s timeline, not yours. And the worst-case scenario? The financing falls through. In contrast, all-cash purchases close fast primarily because lenders are not involved.
4. Selling a House for Cash in Chicagoland is Super-Duper Fast
The nice thing about selling to an all-cash buyer is that you don’t have to doll your house up. No staging, now pro photographer, and no marketing strategy!
Again, no lenders. So you can breathe a sigh of relief! Direct buyers take care of the inspection and repair responsibilities. It’s all pretty fast and painless.
Basically the steps go like this: you call an investor, they ask you some questions, and if interested, they make you an offer.
You accept (or don’t) BUT if you accept you close within 1-2 weeks.
Say you have to move for a job transfer, or if a loved one is ill and you need to move out of town - selling all-cash is a time-saver.
5. Not Sure? Sell Your Home With an Agent
If you’re weighing the decision of selling your house to an all-cash buyer, you don’t have to decide TODAY.
Seriously, there are other options for the meantime while you decide whether selling a house for cash in Chicagoland is right for you.
Is your home in pretty good shape? Consider renting it out. Simply hire a property management company or you can be on standby for maintenance and repairs yourself. Since rental costs tend to be more than mortgage costs, the rental can supplement or completely cover your mortgage payment. So it’s nice to have a property management company handling things.
6. You Can Also Offer a Lease-to-own Option
How about partnering up with a real estate agent in Chicagoland and offer a lease-to-own option to tenants?
Are you selling a home in Chicago, IL?
Be Aware of All-Cash Scams When Selling Your House for Cash in Chicagoland
Unfortunately, scams abound. This market seems to prey on the most vulnerable - those whose life is in flux due to divorce, death, bankruptcy, etc. A smooth and no-fuss transaction is great and all, but you must keep your wits about you.
A word of caution: investors, unlike real estate agents, do not need a license to operate.
Yes, of course, most all-cash investors are legitimate, however, we’ve seen and heard enough horror stories to make sure our readers remember to do their homework. Really, it’s so important when selling your house for cash in Chicagoland.
Some things you can look for to stay safe are frequently checking up on your credit history. Make sure that no one has taken out a second mortgage on your home. If you come across a company that charges an application fee, get yourself out of there. Also, unsavory businesses can take your equity and leave. This will put you in an even more vulnerable position than when you began. Be vigilant and ask questions, no matter how fast you need to sell your home for cash.
Quick Recap to Selling a House for Cash in Chicagoland
Again, there are several business models
From house-flippers to techie iBuyers, to buy-and-hold investors, each buyer tends to close faster than a typical financed transaction. In addition, you won’t need to worry about staging or showing your home. While the condition of your home may attract different investors from these models, you’ll tend to close within 1-2 weeks.
Again, please be wary of shady businesses and do your homework. Even though you are interested in selling a house for cash in Chicagoland, be safe and take every precaution for the best experience possible.