Should I Buy a Chicago Foreclosure? Part II
Those of you following the Dream Town Blog may remember one of my previous posts about buying distressed properties, and some of the pitfalls involved. I told the story of Dan, who bought a foreclosure. He got a great deal, but it took longer than a conventional transaction and there were several obstacles along the way. Today’s post is about another one of my clients and his experience with short sales.
Brian started looking for a condo near Wrigley Field last spring. After looking at several different properties, he decided to make an offer on a condo that was being offered as a short sale. Following a short negotiation, the offer was accepted contingent on short sale approval by the lender. We were told an experienced short sale attorney was handling the sale for the seller. The sale proceeded, and after several delays, we were told in August that it had been approved and we would be closing within the week.
Brian had his financing lined up and had given notice to his landlord that he would be moving out. Two days before closing, I called the listing agent and was told that the 2nd mortgage had been sold (not deliberately, but as part of a parcel to an investor). Because the seller was not behind on his payments (he had continued to pay his mortgage while his condo was being marketed as a short sale), the lien holder would not agree to the short sale. That was it, the deal was off, and Brian had to make other arrangements.
Luckily, Brian was able to sign a six-month lease while we continued to look. Initially, he told me he was done with short sales, but we ended up viewing another one in Wrigleyville in November. This was an “investor negotiated short sale”. Basically an investor negotiates the short sale terms with the lender, lists the property as short sale approved, and may or may not take title to the property for a short time. The investor makes his money on the spread between what he negotiates with the lender and what he ultimately sells the property for.
Posted at 12:17PM Jan 19, 2010 by Ann Connolly in Buying Comments[0]
