When it is time to sell a property in Illinois, especially one that may not be “market-ready,” you will encounter various types of real estate buyers. While listing on the open market with a real estate agent is common advice, for properties requiring extensive repairs or for sellers prioritizing speed and convenience, off-market solutions with cash buyers become increasingly attractive.
Unfortunately, there is widespread misinformation about who real estate investors truly are, what “cash buyer” actually means, and how different purchasing methods like wholesaling or double closing genuinely work. This article aims to provide clarity on these common questions, helping Chicago area homeowners understand their options.
It is crucial to note that while we provide general insights, real estate laws and regulations vary by state. In Illinois, all the sales methods discussed below are legal, provided the professionals involved adhere to the state’s licensing requirements, when applicable. For specific guidance, always refer to the Illinois Department of Financial and Professional Regulation, Division of Real Estate.
Transactional Buyers: The “We Buy Houses Cash” Specialists
These are the most frequent types of buyers who advertise phrases like “we buy houses cash.” They serve a specific niche in the real estate market where it is not practical to sell a house using the traditional method of listing with a real estate agent on the Multiple Listing Service (MLS).
There are many reasons sellers choose this type of sale; what matters most for them is speed and convenience. Often, these homes are distressed properties, unwanted inherited houses, old rental properties that have used up all their tax benefits, or there could be personal issues like divorce, relocation, foreclosure, or job loss that make selling fast a better solution. So, who are these transactional buyers?
Wholesalers: Facilitating Fast Cash Sales
Wholesalers are individuals or companies who facilitate fast cash sales. They do not actually buy the property, meaning they do not take title to the property at the closing. Rather, they will enter into a purchase agreement with the seller and then assign the rights to execute that contract to an end buyer for a fee. The fee is paid by the end buyer and is determined by the level of buyer demand for the property.
Contrary to some marketing misinformation, this practice is not illegal in Illinois if executed within the required legal framework. While we do not provide legal advice, contracts in Illinois are generally assignable unless otherwise stated. It is best to seek legal guidance if you have questions. The process is ultimately transparent because the seller will see at closing how the money from the end buyer is dispersed. A reputable wholesaler will have been transparent about their process and intent to earn a fee at the time the purchase was negotiated.
The risk with this strategy is that the barrier to entry is relatively low. Therefore, transparency is paramount. Some wholesalers pretend they are the end buyer when they have no intention of buying the property themselves. However, there are very reputable companies whose primary business strategy is to wholesale. These companies often have networks of thousands of end buyers and provide a valuable service by facilitating the sale of properties that would otherwise be difficult to sell quickly.
Double Closers: Taking Title for a Brief Period
The process for a double closer is essentially the same as a wholesaler, with two primary differences. First, the buyer will take title at the first closing, often for a matter of minutes, before a second transaction occurs. In this second transaction, the property is sold from the double closer to the actual end buyer at a higher price. Second, the intention behind this process is frequently not transparent. Often, the seller will have no idea that the party they believed was the buyer has in fact already found an end buyer to sell the property to at a higher amount, just like a wholesaler. This approach is sometimes used to hide a large gap between the original purchase price and the final sale price to the end buyer.
There are companies whose marketing materials suggest they buy all properties and “don’t wholesale,” implying they are somehow more transparent and credible. These “buyers” true intentions are conveniently hidden by conducting two separate transactions. In reality, these companies are often less transparent and are willing to incur two sets of closing costs to mask their true intentions. Guess who ultimately pays for those closing costs? Yes, they are built into the price you are offered. We have seen offers from such companies come in $15,000 to $20,000 less to account for these additional costs.
To be clear, there is nothing fundamentally wrong with this approach, and when fully transparent, its primary benefit is it provides additional assurance to the seller that the sale will close if the buyer provides proof they have the funds to close the first sale. This is a viable solution when the seller values speed and convenience. Just be mindful of clever, fear-mongering marketing tactics that target wholesalers, which can be used to drive the price lower.
Other Key Types of Real Estate Investors
Beyond transactional buyers focused on speed and convenience, you will also encounter investors with different long-term strategies.
Fix and Flippers: The Rehabbers
These are either professional contractors or individuals who enjoy fixing up and selling properties as a way to earn additional money. It’s important to note that a fix and flipper can also operate as a wholesaler or double closer themselves, sourcing properties they intend to rehab. Many times, these buyers are also the end buyers sourced by other wholesalers or double closers. Another segment of this group relies upon real estate agents and sources their projects from the MLS.
Buy and Hold Investors (Landlords): Long-Term Renters
These investors purchase properties with the intention of holding them long-term as rental properties. It is important to understand that a buy-and-hold investor can also operate as a wholesaler or a double closer themselves, in order to source properties for their long-term portfolio. Sometimes the properties they acquire need repairs, and other times they are purchased move-in ready, or even with existing tenants in place. Many times, these buyers are also the end buyers sourced by other wholesalers or double closers. Like the fix-and-flipper, some of these buyers rely upon real estate agents and source their projects from the MLS.
Owner Occupants: Traditional Homebuyers
These are the typical homebuyers who intend to live in the property themselves. They generally work with realtors and source their properties from public or private MLS listings. While not “investors” in the traditional sense, they represent the vast majority of buyers in the open market.
Choosing the Right Buyer for Your Illinois Property
As a seller who may prefer a fast, off-market sale, the best advice is to ask many questions of the buyer visiting your property. Any of these buyer types can be highly credible and an excellent solution to your specific selling situation, just as any of them can be evasive and misleading. One solution is not inherently better than another. What is most important is that your needs as the seller are met, and you feel you are dealing with a reputable company that is transparent about its process.
Conclusion: Clarity in Your Cash Sale
The common advice of always listing on the open market does not apply to every home, especially properties that are distressed or require a fast, convenient sale. Understanding the different types of real estate buyers in Illinois, particularly those operating off-market, empowers you to make an informed decision.
At Joe Homebuyer of Chicagoland, we pride ourselves on transparent, cash offers for homes in any condition. We believe in providing clear answers and a fair solution for your Chicago area property. Don’t be misled by marketing claims that obscure the true intentions. Contact us today to explore your selling options and get your peace of mind back.