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Hey everyone, I have begun looking to purchase my first house. I'm in Chicago and am planning to spend around 325k on a condo/townhouse. I've heard the horror stories of short sales, but have also heard some great success stories. Right now in my budget I'm having a hard time finding an ideal space and have been upfront with my realtor for what I have been looking for (1500ish sq ft, 2br 2ba, newer condo with parking in an area that is served by public transit). I have looked at a few units which I like, but are just a couple hundred sq feet small for my liking.
So my SO has keeps telling me to pursue a SS. My current lease expires this summer, so ideally I would like a place by then. A couple months sooner or later is no issue either. So I'm at the point where I'm not sure to continue looking at regular sales, or beginning to look at SSs. Are people really getting steals on these units with minimal hassle? In your opinion are they worth it?
Hey everyone, I have begun looking to purchase my first house. I'm in Chicago and am planning to spend around 325k on a condo/townhouse. I've heard the horror stories of short sales, but have also heard some great success stories. Right now in my budget I'm having a hard time finding an ideal space and have been upfront with my realtor for what I have been looking for (1500ish sq ft, 2br 2ba, newer condo with parking in an area that is served by public transit). I have looked at a few units which I like, but are just a couple hundred sq feet small for my liking.
So my SO has keeps telling me to pursue a SS. My current lease expires this summer, so ideally I would like a place by then. A couple months sooner or later is no issue either. So I'm at the point where I'm not sure to continue looking at regular sales, or beginning to look at SSs. Are people really getting steals on these units with minimal hassle? In your opinion are they worth it?
Thanks in advance
I would recommend in this real estate market (if you are on no time frame):
To ONLY look at Short sales or foreclosure,
OR to look at regular sale prices where homeowners are very eager to move the property quickly (IE price homes very competively to short sale or foreclosure pricing...those homeowners are few and far in between but their homes do not stay on the market).
My brother sold his home for a massive $300K lost a couple of months ago in Maryland. Brought for 1 million in 2005, sold for $725K (plus real estate closing costs etc). There was a similiar short sale property listed for $750K that was smaller than his plus he had all the upgrades (brazilian hardwoods, Viking appliances, home theatre rooms) while the short sale home didn't.
He originally listed for $775K but still ended up dumping the place for $725K regular sale after 14 days on the market.
The competitor short sale went under contract than the short sale was not approved, and now they re-listed the short sale at $800K ('bpo pricing).
So yes, always consider all distress properties. You might find that rare homeowner who has money to dump their place as a fantastic price..
I am down in Florida. Massive distress properties. This one homeowner brought home for $800K in 2007. His is 4000 square foot plus. Short sales for similar homes are still being listed for $550-600K.
His regular sale (he's a business owner who moved already). He ended up dumping his place for $500K.
So do your research on properties. There are some regular sales on the market at great prices. But if you have time on your hands, look for distress properties.
I would recommend in this real estate market (if you are on no time frame):
To ONLY look at Short sales or foreclosure,
OR to look at regular sale prices where homeowners are very eager to move the property quickly (IE price homes very competively to short sale or foreclosure pricing...those homeowners are few and far in between but their homes do not stay on the market).
My brother sold his home for a massive $300K lost a couple of months ago in Maryland. Brought for 1 million in 2005, sold for $725K (plus real estate closing costs etc). There was a similiar short sale property listed for $750K that was smaller than his plus he had all the upgrades (brazilian hardwoods, Viking appliances, home theatre rooms) while the short sale home didn't.
He originally listed for $775K but still ended up dumping the place for $725K regular sale after 14 days on the market.
The competitor short sale went under contract than the short sale was not approved, and now they re-listed the short sale at $800K ('bpo pricing).
So yes, always consider all distress properties. You might find that rare homeowner who has money to dump their place as a fantastic price..
I am down in Florida. Massive distress properties. This one homeowner brought home for $800K in 2007. His is 4000 square foot plus. Short sales for similar homes are still being listed for $550-600K.
His regular sale (he's a business owner who moved already). He ended up dumping his place for $500K.
So do your research on properties. There are some regular sales on the market at great prices. But if you have time on your hands, look for distress properties.
Listen to your significant other.
Thanks for the post. I guess I'm having a hard time finding these 'awesome deals'. I have a MLS search setup for me, browse through Remax and Barid Warner weekly and havent seen any 'deals'. I have been browsing for maybe 3-4 months. I kind of thought that in an area with as many places as Chicago there would be a lot more options in my range.
I dont 'have' to buy now or even in the next year. However I would love to purchase before summer, even looking at listings daily is stressful to me . My realtor did somewhat dismiss the idea of looking at SSs because I dont have an infinite amount of time (but who really does?). I have been thinking about looking for another realtor that specifically deals with SSs, but I like this guy and he seems knowledgeable. I kind of wish I can just tell him find me some good deals in your opinion and lets take a look.
Even though I have set my budget at 325k (I can also cover closing costs), I have all of the listings maxed out at 325k too. Not sure if I should up this to 350k as there may be some room to negotiate. I just dont want to start the game of another 20k can get me this place and pretty soon I'm wanting a 500k place.
Short sales can be slow and frustrating, but they can also be very good deals. If you have the time and patience to wait it out, and risk having it never close, then go for it. Your agent should be able to help figure out which short sales have a better chance of getting approved (based on prior approval, number of loans, which banks, experience of listing agent, etc.).
Make sure your agent explains to you the risks - the homes are sold AS IS. Lenders will not pay for past due HOA fees or other liens such as unpaid utilities. The buyer has to take those items into consideration as part of the purchase price. I've had buyers get very good deals with short sales, others have gotten frustrated and started only looking at regular sales. It's really up to you.
FYI - the most important person in a short sale is the listing agent. The buyers agent can help a little, but going to a buyers agent specializing in short sales can only help to the extent that they can look at the situation and see if it is more/less likely to get an approval.
I am so glad that this question was asked - as I also have been considering looking at Short Sales (in Delaware). Also, thank you NinaN for all the excellent information!
So some additional questions: I understood about the As Is situation, but didnt even think about all the potential liens and additional costs (any elaboration of what to look for and ask about would be helpful). At what point are you made aware of all costs the buyer would be responsible for? I am assuming that payments for anything outstanding is made at closing - is that correct?
In terms of offer: how long is the process - I have heard months - what is the typical length of time? Can you negotiate prices as in regular sale? If so, how far below asking price should/can you go? Should we assume to go in with last and final offer? Can you ask for them to pay closing costs as part of the offer? From the point that the offer is accepted to closing - what is the typical length of time? Can you ask for specific time (30-60 days)?
A follow up to Nina's advice on the agent. Whether a listing or buyer's agent, make sure they're well schooled in short sales. This is probably the largest financial transaction you'll have done, so make sure you're in capable hands.
As far as the liens go, your agent should ask the listing agent up front. Also, when the short sale is approved, the title company will send a preliminary title report which shows any liens. But always ask the listing agent because sometimes the lien can hit the home after the prelim title is run.
Some short sales are in bad shape, totally messed up... I looked at a SS asked for 250K, but in my opinion, if they asked for 150K or less, I still don't want it.
Some short sales are in bad shape, totally messed up... I looked at a SS asked for 250K, but in my opinion, if they asked for 150K or less, I still don't want it.
Very true. Short sells (at least some that I had previously looked at in Florida). Yard are very poorly maintained. Carpets torn. Couple of holes in the wall.
The reason: Many short sellers (in Florida or other judicial foreclosure states) can routinely live in their homes for over 3 years without paying the mortgage. So they barely maintain their homes.
Some foreclosures are in much better shape than short sales.
These days distress properties are like a box of chocolate. You can get a pristine short sale condition home or a pristine foreclosed home. Or you can get a trashed foreclosed home or a filthy short sell home.
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. My realtor did somewhat dismiss the idea of looking at SSs because I dont have an infinite amount of time (but who really does?). I have been thinking about looking for another realtor that specifically deals with SSs, but I like this guy and he seems knowledgeable. I kind of wish I can just tell him find me some good deals in your opinion and lets take a look. 
