More Than 800 Chicago Properties Go Up for Auction After City’s ‘Worst Landowner’ Goes Bankrupt 

Given how difficult it is to find affordable properties these days, it tends to be huge news when hundreds of spaces become available all at once. 

In Chicago, a significant number of properties in the city’s South and West sides are currently up for auction, linked to a legal dispute involving a prominent landowner.

More than 800 lots are now up for auction, with investors sure to be diving in to assess the properties swiftly, given the lucrative deals they could potentially make.

Still, if you’re someone who is thinking about bidding on a house for auction, there are some key factors to consider first. Let’s look at the pros and cons.  

Chicago’s ‘worst landowner’ loses hundreds of properties due to neglect

A joint investigation by the Illinois Answers Project and Block Club Chicago revealed that a prominent Chicago landowner let her properties fall into such disarray, she lost everything in one fell swoop. 

The city filed a lawsuit against the owner and her sister for building an “empire of neglected and hazardous vacant lots.” The joint owners accumulated fines topping $15 million due to rat-related code violations and for allegedly dumping hundreds of decomposing rubber tires that “piled multiple feet in the air” on their lots. They then attempted to file for bankruptcy to skip out on the unpaid tickets and legal judgments.

In the lawsuit, the city called the owner a “scourge on the city and its residents” and “the city’s worst landowner.”

Because the sisters filed for bankruptcy, they are now legally required to auction off the 812 lots they owned, marking one of the city’s largest land sales in recent years. Hilco Real Estate, a full-service, strategic real estate advisory firm, is handling the sale. 

According to experts who spoke to Block Club Chicago, while these properties are “worth little individually, their values can escalate if the local real estate market improves where the land is located or if the land is needed for a project.”

How do real estate auctions work?

A housing auction is a public sale of residential properties. As with the case above, properties can be auctioned off due to property being repossessed by the bank due to bankruptcy. A house could also be auctioned off if it has been foreclosed on or if the original owner owed the government enough money to reclaim it. 

There are four types of property auctions:

1. Reserve auction

In this scenario, the seller sets a reserve price, typically higher than the opening bid. If the reserve price is not met, the sale does not go through. You can be the highest bidder, but if you don’t meet the reserve price, the bid will be rejected.

2. Absolute auction

In this scenario, the highest bidder automatically wins the property. No reserve price is set, so anything goes with the purchase price. 

3. Minimum-bid auction

The bidding begins at a specified price, a price that is typically publicized with the announcement of the auction. 

4. Foreclosure auction

Here, the sale of a property is taken over by a bank or lender after the owner defaulted on their mortgage. These properties are often sold at less than market value.

The reality of buying a property at auction

Everything comes at a price, and when buying a house at auction, what you save in the initial sale might just mean more money to be fronted down the road. 

The reality is that, in most scenarios, you don’t get to go inside the home before submitting a bid. No look under the hood means there could be a world of surprises waiting for you on the property, from structural damage to pest infestations. 

Another huge twist: You can’t get a mortgage or use a lender. Most real estate auctions deal only in cash, so you’ll need to come prepared with a cashier’s check and a serious nest egg. 

In the rare case that the auction does allow financing, get pre-approved before you start bidding. Property auction winners will still go through a property closing just like a traditional real estate transaction, and there will also be auction fees.

How to find auctioned houses

Online searches and ads in your local paper are the best places to start to find auctioned houses in your area. You can also search for foreclosures with Realtor.com®.

When you’re starting your buying journey, let your real estate agent know you’re interested in auction properties so they can be in touch with local auction houses.

Though auctions are usually advertised locally, auctions are now very commonly conducted online. Just type in a search for “online home auction in [state of your choice],” and you can see a plethora of options.