Can You Compete With Cash Buyers? What Chicago Homebuyers and Sellers Should Know
Finding a home you love is exciting—until you hear that someone has made an all-cash offer.
If you're planning to finance your purchase, it can feel like you're already at a disadvantage. But not every cash buyer is a wealthy investor. Some are longtime homeowners using the equity from their previous home to purchase their next one.
Understanding this can help buyers compete more confidently and help homeowners see new possibilities for their next move.
1. Some Cash Buyers Are Homeowners Using Their Equity
In September, 27% of existing-home sales nationwide were all-cash transactions—more than one in four.
Cash buyers include investors and second-home buyers, but also homeowners who sell one property and use the proceeds to buy another.
The key is home equity: the difference between what your home is worth and what you still owe on your mortgage.
For example, if your home is worth $700,000 and your remaining mortgage balance is $200,000, you have approximately $500,000 in equity.
Your actual proceeds would be lower after selling expenses and other applicable costs.
If you're downsizing or moving to a more affordable area, those proceeds could substantially reduce the mortgage you need—or potentially allow you to purchase your next home with cash.
2. Don't Let Your Low Mortgage Rate Make the Decision for You
If you locked in a low fixed mortgage rate years ago, moving may feel financially difficult. Taking out a new mortgage at a higher rate is understandably unappealing.
But the interest rate is only one part of the picture.
If you have substantial equity, you may be able to make a much larger down payment on your next home and borrow less than you expected.
That doesn't automatically mean your total housing costs will decrease. In Illinois, property taxes are especially important, along with homeowners insurance, HOA fees, and maintenance.
Before deciding whether to move, look at three numbers:
Your estimated net proceeds after selling your current home.
The mortgage amount you'd actually need for your next purchase.
Your total monthly housing costs after the move, including taxes and insurance.
Once you have those numbers, you can make a much more informed decision.
3. Buyers With Mortgages Can Still Compete
Cash sales may attract attention, but they aren't the majority of transactions.
If 27% of September's existing-home sales were all cash, approximately 73% involved financing.
So don't rule yourself out simply because you need a mortgage.
Instead, focus on being well prepared.
Work with your lender to review your income and assets ahead of time. Understand the difference between the amount you're approved to borrow and the amount you can comfortably afford.
It also helps to understand the seller's preferred closing timeline.
Sellers consider more than just the offer price. They also evaluate financing reliability, contingencies, and the likelihood of a smooth closing.
The goal isn't to offer more than you can afford or give up important protections. It's to submit the strongest offer that makes sense for your situation.
4. Chicago Suburbs Require a Neighborhood-by-Neighborhood Approach
A national cash-buyer statistic can't tell you exactly what's happening in Naperville, Glenview, Northbrook, or Buffalo Grove.
Even within the same community, competition can vary by price range, property condition, taxes, HOA costs, and location.
If you're buying in Glenview or Northbrook, for example, start by reviewing recent sales of comparable homes and the terms that made those offers competitive, when available.
If you're selling, don't assume a cash buyer will appear and justify an unusually high asking price.
Price your home based on recent comparable sales and current competition, and make sure its condition and best features are presented clearly.
National headlines provide context. Local market data should guide your decisions.
5. Sellers Should Evaluate the Entire Offer, Not Just the Cash
An all-cash offer can eliminate some of the uncertainty associated with mortgage approval.
But cash doesn't automatically make an offer the best choice.
A cash buyer might offer a lower price, request inspection contingencies, or propose a closing date that doesn't fit your plans.
When comparing offers, consider the purchase price, proof of funds, earnest money, inspection terms, closing schedule, and how expenses will be handled.
A well-prepared financed offer with attractive terms may be just as compelling—or even better.
What matters is the net amount you'll receive and the overall likelihood of a successful closing.
The Bottom Line
Hearing about cash buyers shouldn't cause you to assume that your options are limited.
If you already own a home, find out how much equity you have and what it could mean for your next move.
If you're buying with a mortgage, prepare your financing, establish a comfortable budget, and develop an offer strategy based on the local market.
The best place to start is with your own numbers.
Whether you're buying or selling in Naperville, Glenview, Northbrook, Buffalo Grove, Chicago, or the surrounding suburbs, I'd be happy to help you evaluate your home's potential sale price, your next purchase budget, and your ideal timeline.
Sang Han
773-717-2227
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