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There's Nothing Short About a Short Sale

Curbed University delivers insider tips and non-boring advice on how to buy, sell, or rent a home or apartment. Additional questions welcomed to Curbed Chicago's tipline.

For a buyer, there isn't a bigger misnomer in real estate than a short sale, because buying a short sale can be a long, frustrating process. That's not to say that you shouldn't think about buying a short sale, but there are some things to keep in mind before wading in. When a homeowner can't make the mortgage payments, they'll often strike a deal with the bank to sell the property at a loss (that's the "short" of it). As a result, the bank loses money and has to pay some fees, and owner's credit is ruined. It's lose-lose for both parties, but it's less bad than foreclosure.

When they come back to the market, short sales are often priced at a fraction of what they previously sold for, but that price isn't necessarily a reflection of reality. In order to get a lot of offers, listing agents for short sales will basically pick a number out of the blue, Realtor Michael Vrielink from ZipRealty told the Chicago Tribune a while back. If you do bid on a short sale and your offer is accepted, it can still take several months to close on the home. The process is drawn out for a number of reasons. First, lenders aren't accustomed to dealing with so many distressed properties, and they can be overwhelmed with the sheer volume of applications. Also, mortgages are often owned by several different parties, all of whom must come together in order for the sale to go through.
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