Selling a home in Chicago isn’t as easy as simply saying “yes” to the highest offer. As every experienced real estate agent knows, things aren’t always as they seem.
The perfect offer can easily go south for a number of reasons — the buyer may not have their finances in order, or they may experience buyer’s remorse.
To save yourself from the frustration of a failed offer, get to know the markers of a strong sale. According to some of Chicago’s top real estate agents as identified by OpenHouse Realty, an agent referral company (and a U.S. News partner), here are four red flags to look for before you draw up the paperwork.
[Read: 5 Up-and-Coming Neighborhoods in Chicago to Buy a Home.]
The buyer is prequalified, not preapproved. A prequalification just doesn’t cut it nowadays. A potential buyer can get one of those letters after only a quick telephone conversation with a lender — no real fact-checking required. Those who are serious about selling their home should make sure buyers have a preapproval letter. Preapproval letters are not as easy to acquire, as buyers must prove they have good credit, reliable income and funds for a down payment.
“A preapproval letter doesn’t ensure [a buyer can afford your property], but it makes it much more likely that this person could actually afford what they’re trying to buy,” says Mario Greco, founder of the MG Group.
Vadie Reese of the Berkshire Hathaway HomeServices KoenigRubloff Realty Group recommends going as far as contacting a buyer’s lender to ensure it has done its due diligence. “If the loan officer does not have a complete financial profile of the buyer, then they preapproved them without having the full picture,” she says. “They need the documentation to support what that buyer has stated to them.”
Even if your potential buyer is paying with cash, it’s still important to do your homework. Sunny Lamda of Publix Realty tells clients to make sure that any preapproval letter from buyers using cash for their purchase was printed within the last 30 days, as some people present outdated bank statements.
“You want to actually see it in [the] document that they do have this cash, and they can purchase this property from you in cash,” he says.
[Read: 5 Ways to Guarantee a Higher Offer on Your Home in Chicago’s South Side.]
The buyer asks for too much closing assistance. In Chicago, it’s not uncommon for buyers to ask a seller to pay a percentage of closing costs. In most situations, 6 percent is the maximum that a seller should be asked to cover.
“If a buyer asks for the max closing assistance, that would be a red flag because it may mean that the buyer may not have enough liquid cash themselves to purchase the property,” Reese explains. If that’s the case, your home could go back on the market at an inopportune time.
The buyer adds contingencies to the contract. It’s important to read the small print on any offer, and ask your real estate agent and attorney to explain anything you don’t understand. While contingencies aren’t necessarily a deal-killer for everyone, Lamda recommends being very careful before moving forward with one.
“I’m not saying always frown upon it, but make sure that you do your homework and that the buyer has already listed their property for sale or have already received a contract,” Lamda says.
Oftentimes, buyers only send in a good proposal once they can sell their own property first. That’s not always an ideal situation. “Your buy is now dependent on their sell and their buy,” Lamda says.
The buyer tries to slow things down (or speed things up). A property sale in Chicago can typically close within about 60 to 70 days. When buyers request more time than that, experienced real estate agents start to worry.
“If they’re asking for more than 60 days or some long period of time, the question is why?” Reese says. “Typically, if they need that amount of time, what we’ve found is that sometimes there are some credit issues that the loan officer is still helping the buyer work through.”
[Read: 4 Real Estate Trends to Know Before You Sell Your Chicago Home.]
It’s also worth paying attention to the time requested for the attorney review process. The norm is about a week, and when buyers ask for an extension from the get-go, you should be suspicious. “Anything more than that you have to wonder, do they know what they’re doing?” Greco says.
On the flip side, few sellers want to wait longer than 30 days, but Reese also notes that it could be important to take a close look if buyers want to move more quickly than that previously mentioned range. That could be a sign that the buyer had a previous deal fall through. “If [the buyer] was denied for the previous property, it very well could happen for the next property,” she explains.
Looking for a real estate agent in Chicago? Our Find an Agent tool can match you with the person who’s most qualified for the job.
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4 Red Flags Chicago Home Sellers Should Look for Before Accepting an Offer originally appeared on usnews.com
