How to Win Bidding Wars on Chicago 3-Unit House Hacks (5% Down Buyer)

Question

Hello Everyone,

I’m trying to buy my first legal 3-unit in Chicago using the 5% down conventional owner-occupied program. I’m fully pre-approved (strong W-2 income, good reserves, quick close).

I’ve lost several offers recently in Bridgeport and on the North Side (Avondale, Logan Sq, Albany Park). Winning buyers had escalation clauses, waived inspections, and appraisal-gap addenda. My current agent hasn’t been very hands-on, so I’ve mostly been finding listings myself.

Looking for advice from investors and agents who are winning deals right now:

• What’s the smartest way to structure a competitive offer when there are multiple bids?
• How much over the list makes sense, and when do you add escalation or an appraisal-gap clause?
• How risky is it to waive inspection contingencies for a 3-unit?
• Any hands-on Chicago multifamily agents who consistently win bidding wars for 2-4 unit house hacks?
• Are there submarkets (Portage Park, Bronzeville, McKinley Park) with less bidding pressure but good upside?

What’s the smartest way to structure a competitive offer when there are multiple bids?

How much over the list makes sense, and when do you add escalation or an appraisal-gap clause?

How risky is it to waive inspection contingencies for a 3-unit?

Any hands-on Chicago multifamily agents who consistently win bidding wars for 2-4 unit house hacks?

Are there submarkets (Portage Park, Bronzeville, McKinley Park) with less bidding pressure but good upside?

Goal is to build a long-term portfolio (plan to refi and buy again within 18 months). Appreciate any insight from people actively closing in 2025!

Sarita Scherpereel · Answer

Your agent is the problem. In Chicago's north side who your agent is is VERY important. Listing agents want to make sure you have someone on your side that will help you navigate these 100 year old buildings. The fact that you're posting on BP shows me you're working with someone that doesn't have a pulse on the market. Most BP know how to navigate these bidding wars and have the experience listing agents look for.

I cannot tell you how many times our clients get deals not because we were the highest offer but because the listing agent knew we could get it to close. I'm not trying to be egotistical but it works both ways. There's 5-10 agents in Chicago that I love to see at my listings because I know they can help me bring a buyer to close. We are educating our buyers on the buildings and what it takes to be a landlord so there is no cold feet.

Your questions are not one size fits all. Your strategy should depend on the property, location and the demand. Seeking answers that work across inventory types and neighborhoods isn't going to get you the specific paths you need to win a bidding war. The neighborhoods you listed have such different types of opportunities. Deals should be unique in those structures. Especially in the hottest markets in the city. Escalation riders are not always expected so your agents CMA should be structures to find the max in those cases.

Find an investor friendly agent that specializes in house hacking. You'll see how much this inventory is complicated and you need an agent that understands that so you don't over pay or waive unnecessary protections on your contract that keep you from buying a bad building.

Henry Lazerow · Answer

Find a good agent who KNOWS these buildings and what they go for. I have sold a bit over $55 million of 2-4s in Chicago and instantly know what kind of offer is really needed to win. This can be anywhere from below ask to six figures over ask.

Some properties let you use escalation clauses but many do not. If they let you, it can be a nice tool.

Fall/Winter is the least competitive time (best time of year to be a buyer) so stay on it and see what you can land!

Anne Connor · Answer

Thanks to all for the great feedback!

Paul De Luca · Answer

@Anne Connor

The smartest way to structure a competitive offer in a multiple offer situation is to be as accurate as you can be with your underwriting, understand the comps, and be clear about what terms are negotiable and non-negotiable for you.

How much you offer over list will depend on the comps, your underwriting, and what's acceptable to you. Comps are useful but they are always backward-looking and reflect past market conditions. The market is always in flux and based on current supply & demand which is affected by current mortgage rates & other macroeconomic conditions and supply available at the moment.

I would not recommend waiving your inspection unless you are an experienced investor. It's definitely a risky move.

Some areas have less inventory than others so that's a factor to consider when gauging potential competition. For example, Chicago has 3.3 months supply of 2-4 units but Portage Park only has 1.4 months of inventory.

I also like to recommend offer terms by analyzing the situation from a game theory perspective. Comps are easily accessible by all realtors however the interpretation of value is going to vary among agents and their buyers. Usually I conclude the market value between a specific range of between $0-$20k (ex market value is $400k-$420k) depending on how many good comps there are. If you assume that all the other agents are seeing the same data and you can justify a higher value, if you can offer the higher price that will help increase your odds.

Rick Albert · Answer

There is almost always properties that are overpriced and sitting. Go for those (even if they are four units) and negotiate down.

I would not waive inspections and escalation clauses are great, don't put a cap (because if it goes too high then you just walk away) and leave the appraisal contingency.

Parris Taylor · Answer

@Anne Connor Can't speak specifically to CHI market but sellers don't always pick the highest offer; they pick the one that feels inevitable. Make yours frictionless: short close, clean terms, proof of funds, and flexible timing. Use escalation only when you’re sure the list is underpriced and comps prove it; otherwise you’re just donating leverage. Add an appraisal-gap clause only if the deal still works on the lower numbew (cash flow first). Never waive inspection on a 3-unit. Walk it with a contractor early, then write “inspection for info only” to look fearless without being reckless. Hunt old listings with bad photos, half-finished rehabs, or unclear rents. That’s where strong, clean buyers buy $1 of value for 70 cents while everyone else fights in open houses

Elealeh Fulmaran · Answer

You’re close; win with clean terms, proof you can close, and speed without being reckless. Here’s the play:

• Price: set a walk‑away number, then use an escalation with a cap tied to comps and in‑place rents; pair it with an appraisal‑gap limited to what you can comfortably cover.
• Terms: bigger EMD, short inspection period not waived, but prebook inspector and key specialists; ask for seller disclosures up front and use inspection to negotiate only for health/safety or structural.
• Lender: include DU/LP or pre‑underwrite letter, fund your reserves, and show shorter close with an ordered appraisal slot.
• Search: add adjacent submarkets with similar tenant bases where days‑on‑market are a touch longer; have your agent call the listing agent before writing to learn hot buttons and tailor. Next step: pick one target 3‑unit, draft offer A and offer B with your max, escalation cap, and appraisal‑gap limit, and be ready to send within hours of touring.

Daniel Bourdeau · Answer

Hey, it's brutal out there. You're trying to buy in the single most competitive part of the market (the 2-4 unit house-hack) with the lowest-down-payment product. I feel your pain.

As an agent and investor, here’s my take:

• Offers: With 5% down, you're competing against 20%+ down or cash, so your offer has to be strong elsewhere. A clean offer with an escalation clause (e.g., "$2,000 over the highest verified offer up to a cap of $X") is pretty much standard. An appraisal-gap addendum is often the tie-breaker. You have to decide what that "gap" is worth to you based on your reserves and what you think the real value is.
• Markets: The markets you lost in (Logan, Avondale) are at a frenzy. The ones you mentioned (Portage Park, Bronzeville, McKinley Park) are exactly where you should be looking for better value and less competition.
• Agents: You should not be the one finding all the listings. You need an agent who lives this space, understands the house-hack math, and is calling listing agents to find out what else sellers need (like a fast close, rent-back, etc.) to make your offer stand out.

With 5% down, its really a numbers game. Inventory is so low in chicago at the moment that any decent property gets a ton of offers, although the fall has slowed that down a little.

My team and I specialize in exactly this (investor-focused, 2-4 unit purchases). Feel free to DM me if you want to chat strategy.

Jonathan Klemm · Answer

Hey There @Anne Connor - I'd for sure agree with @Sarita Scherpereel.

The fact that you are saying your agent hasn't been very hands on should trigger the immediate red flag that you should find an agent is very familar with the 2-4 unit Chicago market.

I do really like those sub-markets you mentioned, even better than the prime markets, if you are looking for good upside at a lower price.

Moral of the story is get a new agent.  Talk to several here on BP or at some of the local investor meetups:  https://www.biggerpockets.com/forums/521-real-estate-events-...

Ask the exact same questions from above and right down all those answers (rank them), then maybe throw them into chatGPT and have it rank them as a second check.  ChatGPT is a great tool but at the end of the day you want an agent who vibe the best with and can get the job done.

Tj Floros · Answer

Hi Anne,

I house hacked in Logan and currently house hack in Bridgeport and grew up there so I'm familiar with the market.

- Your agent should be talking with the other agent (listing agent) to see what's important to the seller most of the times its price but it also be closing ie 45 day close for the current owner to find a new apartment /house, could be downpayment. I had an outstate client win a deal with not having the highest offer but the highest downpayment he was near 30% down because he was doing a 1031. While your agent works for you the sellers agent works from them we as agent try to create deals and get them to the closing table because the agents will be working together under contract.

- going over list depends on you and your comfort level. If your agent pull comps and the comps say the building is worth no more then 650k BUT you love the building, location, layout whatever then maybe you go over asking to get the deal. You would be surprised that going 20k over list wont really change the numbers that much. Like if the building was cash flowing 1k a month at list and you offer 20k its not going to drop in the red 1k a month if that makes sense. As long as the comps support that 20k over list and your agent does not see an appraisal issue I say go for it if the property checks off a lot on your list and you have been on the hunt for a while.

- I would tell you isn’t not 2020 and you should NOT be waiving your inspection, unless you are doing a full gut. But if this is your first deal do the inspection, you need to know what you are buying because you are new and this is your first deal.

- I would say any agent here on BP is going to fight for their client to get them under contract.

- A lot of people are looking in portage park, Mckinley because other markets have them priced them out.

I’m writing offers right now on my 3rd property purchase so I’m in the same boat as you. It sucks losing out on deals and losing offers, but give it a week another building will hit the market that meets your buy box. Just give it time and really dial in on your buy box what you want in the building, what you need in a building, and what you can live without. Location is the only thing you can’t change.

How to Win Bidding Wars on Chicago 3-Unit House Hacks (5% Down Buyer)

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