Great news for potential home buyers–when it comes to getting a great deal, Chicago ranks #1. Real estate website Zillow has named Chicago the top buyer’s market among the 50 largest metropolitan markets. The reasoning behind it? Chicago real estate buyers have negotiating power, thanks to high inventory of homes for sale that lead to steep price cuts.
With more supply than demand, Chicago is well-poised for buyers who are real estate shopping. In May, Zillow found that 48 percent of homes in the Chicago area sold for less than their previous selling price, having seen at least one price cut and an average discount of 5 percent less the most recent asking price.
For several months now, we’ve seen sales close with buyers getting a great deal on luxury real estate in Chicago–buyers have been able to get into prestigious buildings and coveted neighborhoods with tens and even hundreds of thousands of dollars knocked off of original list prices.
With the research from Zillow and what I’ve observed personally in the last few months of home sales, buyers are still in good shape to negotiate a purchase. But it’s not as simple as walking through the door and making a low-ball offer. For buyers, there are three things that are key to negotiating a deal in Chicago real estate:
1. Know recent sales. Each month I report on the previous month’s top sales for single-family homes and condos. Sure, these properties are off the market, but it’s crucial for buyers to understand the factors that played into these sales and why these deals closed for the price that they did–things like neighborhood, the building, square footage, recency, etc. all play into that purchase price. Buyers who know the price of comparable properties can use that to their advantage.
2. Cash is king. A cash offer is a seller’s dream–with a real estate market like we’ve seen in the past few years, many deals have fallen through because buyers couldn’t secure a down payment or financing. Paying cash immediately puts you ahead of any other offers simply for the integrity of the offer and assurance that the deal will close. If cash isn’t a possibility, buyers should be able to make at least a 20% to 30% down payment and have an excellent FICO score.
3. Timing. Buying real estate is like the stock market–it’s impossible to tell the exact-right moment to work out a great deal. In my experience, buyers who are able to take advantage of a market like this one will come out on top. Once the Chicago market begins to uptick (which it has in some areas), there’s no telling how long we’ll be able to label it a buyer’s market. These windows of opportunity are often small and short-lived, and once you’re saying “coulda, woulda, shoula,” it’s too late.
If you’re considering a Chicago real estate purchase, give me a call to discuss the best approach for scouting a great buy in this market. Contact me at 312-264-5853 or email me at [email protected]