Sue Fox, @Properties. Direct 773.816.1788

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Chicago short sales: Are they worth the hassle?

filed under: Buyers, Sellers, Short sales posted on October 20th, 2009

A real headache: Two out of three short sales never close.

A real headache: Two out of three short sales never close.

In my opinion: No.

I tell my buyers that trying to buy a property listed as a short sale is like falling for someone who’s already married. Short sales often lead to frustration and heartbreak, no matter how attractive the price might seem up front. Try to remember that in many cases it’s an imaginary price, with little relation to what the seller actually owes on the property.

With a short sale, the seller is no longer calling the shots. It’s up to the bank that holds the mortgage whether to accept an offer, and most lenders don’t want to accept less than what they are owed. If you submit an offer, it could be months before you receive an answer from the bank. In many cases, there are two mortgages on the property, which means you’re waiting for a response from two banks.

The answer, when it finally comes, is often no. In fact, two out of three short sales never close, according to a recent article in the Chicago Tribune (read the full story here). I’ve seen other reports suggesting that some lenders actually prefer to let homes slide into foreclosure, because that postpones the day they must record a loss on their books.

Many sellers are trying short sales these days because they believe it won’t hurt their credit as much as a foreclosure. But short sales are a massive headache for everyone involved, and in most cases they won’t work anyway. If the seller can’t afford to resume paying the mortgage, the property is likely to wind up in foreclosure.

Written by Sue Fox // Please leave a comment.