In an effort to find the best real estate investments in Chicago, an old colleague of mine, Josh, came to me for some direction. He’d tried his hand at investing in the past, but quickly gave up after getting burned on a deal that was too good to be true. Not wanting to waste his time or resources on another money pit, he asked what I thought about buying auction properties in Chicago. More specifically, he wanted to know if I could recommend any real estate auction companies in Chicago, Illinois that he should check out. I told him that not only did I know of several, but I’d also actually attended them too. I also told him that he might still risk getting a money pit from an auction, but that I had a recommendation for getting around that as well.
The Rundown on Real Estate Auction Companies in Chicago, Illinois
When many people think of real estate auctions, they think of foreclosure sales. Most lender-foreclosed homes are sent to auction, either by the bank to recoup some of their costs, or by order of the court, so they’re not necessarily wrong. Though foreclosure rates in Chicago are down compared to this time last year, they’re still above the national average. So, in theory, you can still find the opportunity to buy distressed homes for sale cheaply at foreclosure auctions.
But foreclosure auctions aren’t the only property auctions available to real estate investors. There are a few other real estate auction companies in Chicago that handle homeowner-to-buyer sales and bankruptcy auctions, for example. The houses sold through these companies typically need a lot of work too, which means buying and renovating a property from one of them to rent or sell could also produce potentially good returns.
Real Estate Auction Companies in Chicago
To start, I gave Josh the rundown on four different real estate auction companies, including two that hold non-foreclosure auctions. I also gave him my first choice for buying investment property in Chicago. Here they are:
Chicagoland Real Estate Auctions
Chicagoland Real Estate Auctions conducts sales on residential properties that are owned by motivated home sellers who need to offload a property quickly. Information about the homes, as well as a few details about the terms of sale, are listed on their website. All properties come with clear titles, and you can request a home inspection before you bid. You can also submit a pre-auction offer if you prefer. In addition, you can make cash offers on auction properties or use conventional financing. However, you can’t see any details about the auction process, location, opening bids, and down payments until you sign up for their email list. And you can’t bid unless you create an account. Then, there are typically only a handful of properties available for sale at any given time, and competition from other real estate investors in Chicago tends to be pretty strong. This means your chances of actually winning a bid are pretty slim. Needing to jump through so many hoops just to compete over a handful of properties doesn’t feel worth it to me.
Fine & Company, LLC
Fine & Company holds open outcries, sealed bids, and electronic auctions on a wide range of investment properties in Chicago, including residential for-sale-by-owner and bankruptcy homes. Their website lists information about the type of auction, location, days and times, and minimum bids. Sometimes they also provide inspection dates to potential buyers. However, you need to pay an upfront fee to gain access to other details about the property, such as title documentation and the terms of sale, regardless of whether you decide to bid. You’ll also have to show proof of certified funds to bid and pay a Buyer’s Premium—a percentage of your winning bid—to Fine & Company if you win your auction. Their inventory is also pretty lean, which means finding a great investment property isn’t likely. Even if you do, you’ll pay for it—in fees.
Cook County Sheriff’s Sale
The Cook County Sheriff’s Office hosts about 10% of the foreclosure auctions countywide at the Sheriff’s Sale. They list property details, opening bids, and sales dates and times on their online calendar. You’ll need to pay a 10% deposit, due by certified check at the time of registration. If you win your bid, you’ll need to deliver a second certified check for the balance the following business day—or forfeit your deposit. You’ll still need Cook County court approval if you win, which could take several months. So, if you’re trying to take advantage of current market conditions to quickly buy, renovate, and sell houses, these delays could throw a wrench in your plans. Plus, you may not get the chance to inspect the home before bidding, so you risk buying a property that’s so expensive to rehab you won’t see any returns.
The Judicial Sales Corporation
The Judicial Sales Corporation (TJSC) is one of the largest auctions for foreclosed homes in Chicago. They hold auctions daily, and list most of the information you’ll need to register, like property addresses and deposit amounts, on their website. If you want to buy a foreclosed home from this real estate auction company in Chicago, however, you’ll need to know your maximum bid when you register and pay a deposit based on that amount. If you win the bid, you’ll need to pay in full by 2:00 PM the next day. If you don’t pay in time, you’ll lose your deposit and might need to pay extra fees. Also, you might need to wait months to get court approval and actually take possession of your property, which could push your house flipping timeline beyond your expectations. You also can’t inspect the home before purchasing, so you’ll again risk buying a money pit—something Josh, and you, should avoid at all costs.
Obviously, your chances of getting burned in one way or another when you buy a property from an auction are pretty big—if you can buy at all. So, how do you get around the risks associated with real estate auction companies? By skipping them altogether.
The Best Option for Buying Chicago Investment Property
Like Josh, I got burned on a deal once and it was when I bought a property from a real estate auction company in Chicago. I paid too much for a house that needed more work than I had money to spare. And, like Josh, I promised myself I’d never do that again. After becoming an independently owned and operated HomeVestors® franchisee, I didn’t have to. HomeVestors’ marketing and lead generation tools connect motivated distressed homeowners with local franchisees, like me, who then have the opportunity to buy, renovate, and resell at numbers that make sense—and potentially good returns. To get better leads on some of the best Chicago investment properties, I highly recommend the nationally-known and trusted “We Buy Ugly Houses®” team.
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