Hey there, Chicago homebuyers!
This week, we wanted to talk about something that is increasingly important to discuss with your agent: what could potentially happen after your offer gets accepted.
We’re the Ben Lalez Team, and over the years, we’ve tracked the outcomes of hundreds of our own under-contract deals to understand exactly why some fall apart. We’re obsessed with understanding the data and what it means for our clients.
According to a recent Redfin report, about 17% of residential transactions in Chicago fall through before reaching the closing table. That’s roughly 1 in every 6, and slightly above the national average of 16%. Chicago runs a bit hotter than average, so it’s important to know how to prevent this from happening to you.
Put Thought Into The Agent You Hire
When we looked at which deals actually fell apart in the marketplace, close to 50% of them came from buyers who didn’t have a strong prior relationship with their agent before going under contract. A lot of those buyers had originally found their agent randomly through a third-party portal like Zillow or Realtor.com.
We’re not knocking the platforms, and it feels convenient to pick someone who looks good on a website, but real estate is ultimately a relationship business. When something goes sideways mid-deal (and something always comes up), buyers who don’t fully trust or know their agent will start panicking.
Some common issues we see include less-than-ideal inspection reports, sellers who won’t negotiate on repairs, and lenders requesting more documentation at the last minute. These happen often enough that our team is not only prepared for them – we’re waiting to spring into action when they do come up.
By the way, we recently wrote about some changes happening with how Chicago listings appear on Zillow. If you use it to search for homes, it’s worth a read before you get too deep into your search.
So our approach is simple.
We put real time into talking with buyers before we write a single offer. We want to understand what you’re looking for, obviously. But more than that, we want you to understand what’s coming. For us, managing expectations and showing what could potentially pop up down the road helps you prepare.
The First Two Weeks Are Key
Most deals that fall apart will happen within the first 14 days. That’s the attorney review and inspection window in Illinois, and it’s the first stressful stage of the whole process.
Chicago is made up of a lot of old housing stock, a lot of which was built between 1900 and 1940. If you have a 100-year-old building on your hands, you can definitely expect 100-year-old issues. For example, this could mean galvanized plumbing, aging electrical panels, or masonry that needs work. None of these are automatically deal-breakers, but buyers who walk into these kinds of purchases unprepared can easily freak out.
There are two things that could kill the deal, and this is what we watch for.
The “Deep Discount” Danger
If a seller is willing to go 10% or more below asking price, there’s usually a reason. Sometimes it’s a motivated seller who just needs to move on. But sometimes it’s because the seller already knows what the inspector will find, and they’ve priced it in. When the inspection confirms the issues and the seller won’t budge on repairs, the deal dies.
Condo HOA Surprises
When you buy a condo here, you’re entitled to something called the Section 22.1 disclosure, which is essentially a financial health report on the entire building. This report can reveal a lot, such as signs of underfunded reserves, pending special assessments (which can be very expensive), or multi-million-dollar renovations or repairs. We’ve seen all-cash buyers walk away cold after reading one of these documents.
So what does the Ben Lalez Team do?
For homes, we walk through every property with our clients before the inspection and flag what an inspector is likely to find. That way, there are no surprises when the report comes back three days later.
For condos, we’ve bought and sold in every building in the city. We have a running database of which buildings are problematic and which are good buys, and we’ll share our insights with you before you fall in love with the wrong unit.
When The Appraisal Comes Up Short
With rates where they’ve been, a lot of buyers are stretched really close to the limits of what their lender will approve. And because many Chicago neighbourhoods remain competitive, buyers sometimes need to bid above the asking price to win.
Here’s where it can get complicated.
If you offer $540,000 on a place listed at $500,000 and the bank’s appraiser says it’s worth $510,000, your lender will only loan against $510,000. If you don’t have an extra $30,000 sitting around to cover the difference (a lot of people don’t), and the seller won’t drop the price, the deal falls apart.
How do we protect you?
When we’re writing an offer above asking, we negotiate appraisal gap coverage directly into the contract, just in case.
By the way, there’s a difference between a solid pre-approval from a local Chicago lender and a five-minute online pre-qualification. We’ve seen deals fall apart in the final week because of lender issues that a good pre-approval process would have caught in week one.
That’s why we help our buyers get solid pre-approvals before putting in any offers.
The Importance Of Tight Deadlines
The average Chicago closing takes about 41 to 45 days from accepted offer to keys. Our data showed a pretty clear pattern: every day a contract stays open past that 45-day mark, the chance of it falling apart goes up.
This happens more in the higher-end suburban markets. Longer escrows mean more things can jeopardize the closing, like interest rate swings or changes in life circumstances. In areas like Barrington Hills, 90-day escrows on luxury properties gave cash buyers plenty of time to talk themselves out of deals they would have happily closed on at 30 days.
What do we do?
Our default is to negotiate 21 to 30-day closings whenever we can. A shorter timeline keeps everyone focused, forces earlier resolution of any issues, and closes the window for interest rates, job situations, or buyer remorse to show up.
Making Sure Your Closing Is Successful
Deals that close smoothly don’t just happen on their own. It starts with a buyer who goes in prepared with a fair offer on a well-maintained property, an inspection-and-negotiation focused on real issues rather than cosmetic ones, a strong local lender, and a tight timeline that gets the keys in your hand in 30 days.
That is the discipline we build into every one of our deals.
If you’re thinking about buying in Chicago and want to understand how you can have our experience and strategy on your side, contact us here or call us at (312) 766.9073 before you start looking at homes.
We have an exact process that walks you through what to expect. Our experience in Chicagoland, along with over a decade of hard data, is here to benefit you.
We’re ready to talk anytime!
