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 turned out too good to be true. Not wanting to waste his time or money on another money pit, he asked what I thought about buying auction properties. More specifically, he wanted to know if I could recommend any real estate auction companies based in Chicago, Illinois, that he should check out. I told him that not only did I know of several, I’d 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. Since most lender-foreclosed homes are sent to auction, either by the bank in an effort to recoup some of their costs or by order of the court, they’re not necessarily wrong. And, in Chicago, the number of foreclosures started each year by banks, credit unions, and other lenders remain pretty high despite the recent dip in overall foreclosure activity. So, the opportunity to buy distressed homes for sale cheaply in Chicago can, in theory, be found at foreclosure auctions.
But, foreclosure auctions aren’t the only property auctions available to real estate investors. There a few other 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.
With that in mind, 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 Auctions. Chicagoland 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. However, details about the auction process, location, opening bids, and down payments aren’t made available until you sign up for their email list. And, you can’t bid unless you create an account. The number of properties available for sale at any given time is fairly low too—typically only a handful. Since investor competition tends to be strong at auctions, this reduces your chances of actually winning a bid. Jumping through hoops just to get a look at a property that’s hard to actually buy is very easy to pass up, if you ask me.
- Fine & Company, LLC. Fine & Company holds open-outcry, sealed bid, and electronic auctions on a wide range of properties, including residential for-sale-by-owner and bankruptcy homes. The type of auction, location, days and times, and minimum bids are listed online. Sometimes, inspection dates are made available to potential buyers. However, other details about the property, like title documentation and the terms of sale, have to be ordered for a fee upfront, whether or not 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’re the high bidder. And, because their inventory is pretty lean, 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. Property details, opening bids, and sale dates and times, can be found on their online calendar. Deposits of 10% are due by certified check at the time of registration. If you’re the winning bidder, you’ll need to deliver a second certified check for the balance the following business day—or forfeit your deposit. Court approval is still required if you win and, in Cook County, that could take several months. So, if your goal is to buy, renovate, and sell houses at a time when you can benefit from current market conditions, you may not reach it. You won’t necessarily get the chance to inspect the home before bidding either, which could land you with 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 the state. Auctions are held daily and most of the information you’ll need to register, like property addresses and deposit amounts, can be found on their website. If you want to buy a foreclosed home in Chicago from this organization, however, you’ll need to know your maximum bid when you register and provide a deposit based on that amount. You’ll also have to pay in full by 2:00 p.m. the next day if you win. If you don’t pay, you lose your deposit and could get hit with extra fees. Also, court approval and gaining possession of the property can take months, which is a problem if the extended timeline pushes the rehab, or the sale, into winter. Inspecting the home before buying isn’t an option either. So, again, you risk purchasing 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 foreclosure auction. 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 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. For getting 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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