The Chicago real estate market is extremely competitive. I’ve had many buyers miss out on their first and even their second offer due to the competitive nature of the marketplace. I suggest my clients follow the suggestions below to increase their likeliness of getting their offer accepted.
Find the property you love.
Most people think that they are going to find the perfect home. I hate to be the bearer of bad news but that property doesn’t exist. Instead focus on the 90% property. Throughout this process you will find constant tradeoffs. Whether it be location, size or price, you will be making some sacrifices in your next purchase. Try to build a list of must have features and keep them top of mind. Then build a list of “nice to have” features so you know what is important. If you take this approach you will be much happier with your next home and it will give you clarity throughout the process.
What is the home worth?
Once we’ve found the home we need to figure out what it is worth. We will start with comparable properties that have sold in the last 6-12 months. But comps don’t tell the whole story. Other items that factor into the value of a home include current inventory, time of year, median price/square foot, market time of the listing, and list/sold ratios for the area.
Preparing the offer
After we’ve put together a thorough market analysis, we will write up our offer. It is best to make an offer that is close to what we think the property is worth. I’ve seen too many buyers write lowball offers that end up costing them money in the end. The reason for this is that it can offend the seller and then the rest of the process becomes contentious. If the seller is offended by your offer they won’t want to work with you and every step in the process becomes a fight. I often find that you get into a nickel and dime situation during every turn of the transaction which costs you money in the long run. Remember that the purchase price is only one aspect of the transaction. You still need to negotiate the closing terms and inspection items. There are dollars to be gained or loss in those aspects too and if you start with a lowball offer you are much less likely to have any collaboration during these steps of the purchase.
Pre-approval letter
You will want to include your pre-approval letter with your offer to validate that you are a legitimate buyer. I always recommend you work with the right lender for your situation. I normally recommend either Guaranteed Rate or Wintrust since they both have local underwriters who know the unique aspects of the Chicago real estate market and can be available if and when we hit a snag in financing.
Letter to the sellers
I recommend all my clients write a letter to the sellers introducing themselves. This helps differentiate you from other buyers and helps humanize the process. I’ve had multiple offer situations where sellers took our offer which was lower than the competition because they connected with the new buyers through this letter. It’s an extra step but I believe it is a competitive advantage in the end.