9 Tips for Selling a Distressed Property in Chicago

Selling a distressed property in Chicago can be more complicated than a typical home sale, but it is still very possible.

A property may be considered distressed because it needs major repairs, has unpaid taxes or liens, is tied to foreclosure, was inherited, is sitting vacant, or comes with another situation that makes selling more difficult.

Distressed does not always mean the home is unlivable. Sometimes the issue is financial. Other times it is the condition of the property or the owner’s circumstances.

If you are trying to sell a distressed house in Chicago, these nine tips can help you understand your options and avoid common mistakes.

1. Understand Why the Property Is Distressed

The first step is figuring out exactly what is making the property difficult to sell.

Physical problems may include:

• Roof damage
• Foundation issues
• Fire or water damage
• Mold
• Outdated electrical or plumbing
• Code violations
• Major deferred maintenance

There may also be financial or ownership issues, such as:

• Foreclosure
• Unpaid Cook County property taxes
• Liens
• A difficult mortgage situation
• An inherited home
• A vacant property
• Problem tenants

Knowing what you are dealing with makes it much easier to decide how to sell.

2. Find Out What the House Is Worth As-Is

Before spending money on repairs, get a realistic idea of what the property is worth in its current condition.

The as-is value will depend on factors such as:

• Location
• Overall condition
• Nearby comparable sales
• Cost of repairs
• Demand in the neighborhood

It is also helpful to estimate what the home could be worth after repairs are completed.

Compare the two numbers before making any major decisions.

For example, spending $40,000 on repairs may not make sense if those improvements only increase the value of the property by $25,000 or $30,000.

3. Get Realistic Repair Estimates

If the house needs work, try to get actual estimates rather than guessing.

Focus first on the repairs that are likely to have the biggest impact on the sale, such as:

• Roof replacement
• HVAC systems
• Plumbing
• Electrical work
• Foundation repairs
• Water damage
• Mold treatment
• Structural issues

Older homes throughout Chicago and the surrounding suburbs can also have hidden problems that are not obvious until work begins.

For that reason, it is smart to leave some room in your budget for unexpected costs.

4. Decide Whether Repairs Are Worth It

Once you know what the repairs may cost, decide whether completing them is actually worthwhile.

Making repairs may make sense if the problems are fairly minor, you have the money available, and the improvements are likely to increase the final sale price enough to justify the expense.

Selling as-is may be a better choice if:

• The repairs are extensive
• You do not want to spend money upfront
• The home is vacant and costing you money each month
• You live outside the area
• You do not want to manage contractors
• You need to sell quickly

There is no right answer for every property. The best choice depends on the numbers and your situation.

5. Consider Selling the Property As-Is

Selling as-is means you are offering the property in its current condition without agreeing to make repairs before closing.

This can save a lot of time and money, especially if the house needs major work.

However, selling as-is does not mean buyers give up all of their rights.

Depending on the contract, a buyer may still:

• Inspect the property
• Negotiate the price
• Ask for credits
• Cancel the purchase

An as-is property will often sell for less than a fully repaired home, but the seller also avoids the cost and time involved with completing the work.

For many distressed property owners, that tradeoff can make sense.

6. Understand Your Selling Options

There is more than one way to sell a distressed house in Chicago.

A traditional listing with a real estate agent gives the property the most exposure, but the home may need repairs, cleaning, staging, and showings before it is ready for the market.

You can also list the home as-is. This allows you to market the property without completing major improvements, although the condition may reduce the number of interested buyers.

Another option is selling to a real estate investor or cash home buyer.

These buyers often purchase homes that need work and may be willing to buy the property in its current condition.

When comparing your options, look beyond the sale price.

Consider:

• Expected net proceeds
• Repair costs
• Agent commissions
• Closing costs
• Time to sell
• Carrying costs
• Amount of work required

The highest offer is not always the option that leaves you with the most money or creates the easiest transaction.

7. Address Liens, Taxes, and Title Issues Early

Distressed properties often come with title problems that can delay a sale if they are discovered too late.

Common issues may include:

• Unpaid Cook County property taxes
• Mortgage balances
• Judgment liens
• Mechanics liens
• Condo or HOA balances
• Other recorded claims against the property

If you think there may be a problem, consider ordering title work early.

That gives you time to find out what is owed and what needs to be resolved before closing.

In many cases, liens can be paid directly from the proceeds of the sale if the property has enough equity. That means you may not need to pay everything out of pocket before selling.

For more information, see our guide on selling a house with liens in Chicago.

8. Be Upfront About the Property’s Condition

Trying to hide major problems can create bigger issues later in the sale.

Illinois sellers may have disclosure requirements involving known defects and other material issues with the property.

This may include problems involving:

• Water damage
• Structural defects
• Major systems
• Environmental concerns
• Past property damage

Being honest about known issues can also help avoid surprises after an inspection.

Buyers who understand the condition of the home before making an offer are less likely to walk away because of something they discover later.

If you are unsure about what needs to be disclosed, consider speaking with an Illinois real estate attorney.

9. Consider a Cash Buyer If You Want a Simpler Sale

Selling directly to a cash home buyer may be worth considering when the property has significant problems or you do not want to go through a traditional sale.

This may be an option if the home:

• Needs major repairs
• Is vacant
• Was inherited
• Has code violations
• Has difficult tenants
• Needs a large cleanout
• Must be sold within a certain timeframe

Because a cash buyer is not relying on a traditional mortgage, there may be fewer financing-related delays.

Cash buyers also commonly purchase homes as-is.

There is a tradeoff, however.

A cash buyer will usually factor repair costs, holding expenses, and resale risk into the offer. This means the offer may be lower than what the property could potentially sell for after repairs.

The best way to compare the options is to look at your estimated net proceeds.

A traditional sale may produce a higher price, but repairs, commissions, closing costs, and months of carrying expenses can reduce the final amount you actually keep.

Selling a Distressed Property in Chicago Does Not Have to Be Complicated

A distressed property can still be sold successfully.

The key is understanding what the home is worth today, what repairs are needed, whether those repairs are worth making, and whether there are any title or financial issues that need to be resolved.

From there, you can compare the different ways to sell and choose the option that makes the most sense for your timeline, budget, and priorities.

Big Door Home Buyers purchases properties throughout Chicagoland in a wide range of conditions. If you are thinking about selling a distressed house as-is, you can request a no-obligation cash offer and compare it with your other selling options before deciding what works best for you.

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