Sue Fox, @Properties. Direct 773.816.1788
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Short sales are getting a tad easier these days. That’s not to say they aren’t a pain in the neck — they are, for both buyers and sellers — but hundreds more of them are closing in the Chicago area, and nationwide, as banks finally realize that in many cases this is a better outcome than a foreclosure.
Why are short sales so difficult? The answer is that someone — a bank — will lose money. With a short sale, a borrower is trying to sell his/her home for less than what they owe on the mortgage, sometimes considerably less. In order for a short sale to close, the lender must agree to the loss, and banks by nature don’t want to lose money. Many banks are also swamped with mortgages gone bad, and they typically take months to respond to a short sale offer. And sometimes they say no.
Right now, I have three different short sale deals under contract with various buyers. One was supposed to be ready to close “right away,” since several previous deals had fallen through and the bank had already approved the list price. But it’s been more than a month so far. The other two deals will probably drag on for much longer, since the banks involved have yet to approve a short sale or even respond.
Still, short sales are on the rise. According to a story yesterday in the Chicago Tribune, there were 907 short-sale transactions in the Chicago area in January alone — a 35% increase over a year ago. Foreclosures, however, accounted for twice as many sales.
Nationally, too, more short sales are being completed. An estimated 105,000 short sales closed during the first quarter nationwide, the highest number in three years.
I still don’t advise attempting to buy a short sale if you’re on any sort of a timeline. But if you have months to spare, and plenty of patience to boot, you could give it a shot. More deals seem to be closing, and you’ll probably get a good deal on the price. Short sales sold at an average discount of 23% in January, the Tribune said, while foreclosures sold for 29% off.
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