As any longtime Chicagoan could tell you, the year doesn’t really start until baseball starts. We get out of our long winter freeze, begin to thaw out a bit, and get back outside. This year, that didn’t happen until July. The COVID-19 pandemic put a continued freeze on just about everything.
Well, everything except real estate.
As a real estate investor in this city for decades, I knew that the pandemic and associated economic disarray would mean a lot of business. But that doesn’t mean the business has stayed the same. There had to be a lot of adjustments and new techniques. You need to bring more of the spirit of hard work to get the job done in these unprecedented times.
Baseball is back, but it’s different. Real estate investing never went away, but it’s different. Understanding how to buy Chicago real estate during the coronavirus is the best way to improve your investment business. Adjust to change, and thrive.
With that attitude, here are some of the most effective ways to boost your Chicago real estate investing business during the coronavirus pandemic.
What The Chicago Real Estate Market During Coronavirus Looks Like
When the pandemic-induced recession started, a lot of people I talked to thought that home prices would plummet like they did in 2008. But, those of us in the real estate business knew that probably wouldn’t be the case. After all, the Great Recession was precipitated by a fake real estate bubble, which prompted drops. Other than that, real estate tends to survive even during recessions.
This is the case across America and absolutely the case here in Chicago. And, the primary reason for that is that supply has dropped. There isn’t a lot of selling, and so there isn’t a lot of buying.
In April, contracts declined year-over-year by 54%. In May, the year-over-year decline rate improved to 17%. Listings were basically chopped in half.
What that lack of supply did was keep prices positive, and even rising.
Through May, the median home prices were essentially unchanged from 2019, at about $315,000. By June, prices were rising slightly—some estimates were about 2% over May—and showings were going up. There was pent-up demand for homes.
That means your house buying business should be able to continue to go strong—if you do things a little differently.
How to Buy Chicago Real Estate During The Coronavirus
Now, you might be wondering how you can buy houses when the supply has gone down. The answer is that the supply—of distressed homes, that is—shows an upward trend. Not only is this market sector loosening up, but as rent and mortgage relief starts to wind down, there will be even more pre-foreclosures and foreclosures in Chicago.
Indeed, we’re already seeing that. June pre-foreclosures in Chicago were up 43% over May. There will be more people whose budgets are crunched who will want to sell to avoid the challenges of being foreclosed upon. And, that’s where you come in.
But, how do you buy these opportunities? Here are some tips for purchasing distressed Chicago homes during the coronavirus.
Find leads in different places
The holy grail in Chicago is to find a great home at a great price in a neighborhood people want to get in. Normally, that means looking at the next great neighborhood. Logan Square already full and expensive? Let’s start finding houses in Humboldt Park. But, this recession has changed the market so that’s not the way you want to go about narrowing down where to find leads.
Those preforeclosures we talked about are in neighborhoods we usually don’t see them in. Professions like architects, construction workers, lawyers, marketers, sales, and small business owners have been hit very hard. People in neighborhoods like Logan Square who thought they were on firm footing are suddenly seeing bills piling up and are calculating whether they have to sell. This is where you will find the greatest deals around Chicago.
Be understanding of homeowners’ situations
This is the human side of the business, and to me, just about the most important side. Many people facing foreclosure had no idea this was coming. In March, everything was fine. Then they lost their job and, as the summer went on, they began to understand that mortgage relief was only temporary.
So, there are a lot of homeowners who are facing a world they didn’t expect at all. They are looking for someone they can trust who isn’t trying to take advantage of their situation. If you are respectful, open, and honest, that can go a long way.
Take advantage of technology for virtual showings
You don’t have to go into someone’s house to see if you want to buy it. Most people have video streaming technology on their phones, whether that is FaceTime, Zoom, or even Instagram Live. By contacting a potential seller, you can go through their home online.
A few things to keep in mind:
- Plan ahead. Discuss in advance what you’d like to see so that there aren’t surprises in awkward pushbacks. Emailing them a list of what matters to you is above-board and demonstrates professionalism and courtesy.
- Ask good questions. You’re looking to buy, so you have a right to ask the seller to poke around areas like the foundation or the roof. You can ask them to turn on the shower to show the water pressure. This is a normal home showing, just a little different.
- Be accommodating. Align your technology beforehand. Make sure you have all the different apps so that you aren’t forcing the seller to download something they might not be familiar with.
Understand how to perform remote closure
If you’ve never heard of apps like DocuSign, now is the time to get to know them. These are virtual, cloud-based document sharing apps that allow people to sign a shared form. It’s legal, it’s binding, and it means not having to get in a room with the sellers.
Not only should you get used to it, but you also should learn how to teach homeowners to use it. Help them understand what they need to do. This shows you are not just looking to buy a house, but actively care for their personal health and safety. These things matter.
In this era, you can find a great property in a great neighborhood, cutting down on the risk, reducing your repair expense, and shortening the time to flip. Where you get leads has changed. But now the question is what is the best way to find those leads, and to take advantage of them?
The Best Way to Invest in the Chicago Real Estate Market
With real estate investing, everything relies on getting solid leads. You want to find people who are ready to sell and looking to do so fast. And, you want to quickly establish trust. To me, all that became much easier when I became an independently owned and operated HomeVestors® franchisee. It changed my professional real estate investing business.
See, HomeVestors has been around since 1996. Their nationally-trusted “We Buy Ugly Houses®” marketing campaign is known by homeowners across the country. In fact, I saw a billboard for it over the Dan Ryan here in Chicago just yesterday. So, when distressed homeowners want to sell, they call a HomeVestors® franchisee like me.
From there, all it takes is being professional, understanding their situation, using the right technology to keep everyone safe, and making a fair offer. It’s all part of effectively buying Chicago real estate during the coronavirus.
It’s the best time to get ahead in Chicago real estate investing. It’s time to play ball.
Each franchise office is independently owned and operated.