Tales From the Real Estate Short Sale Trenches

Anyone who has ever purchased a real estate short sale can tell you that the process is filled with uncertainty and potential headaches. You can wait for months after making an offer on a short sale to find out if the bank will accept your offer and then wait for weeks to close. As a Chicago real estate broker I experienced two separate incidents over the past couple of weeks that I'd like to share with you.

Buyer Gets Tired of Waiting and Walks
I have a client here in the city that made an offer on his second purchase this year of a distressed Chicago property. His first purchase was a foreclosure and the transaction closed with few problems. On the second property he made an offer on a three-flat where the listing agent was using a third-party "short sale" vendor. This type of service vendor acts as an intermediary between the listing agent and the bank and is supposed to simplify the process. In this situation what I experienced was just the opposite. In short sale transactions I believe that you need to keep pressure on the listing agent to contact the bank or these transactions can sit on someones desk for months. In this situation the listing agent kept advising us that because of the short sale vendor it was out of his hands and he was unable to even contact the bank. My client was finally frustrated to the point where he rescinded his offer. Fortunately he was able to find another suitable foreclosure to meet his investment needs.

Buyer has High Offer but Bank Select Other Offer
I have a Chicago suburban real estate client that made an offer on a short sale back in April. Fortunately the listing agent was not using a third party short sale vendor. Upon making the offer we were advised that there was another offer but that my client's offer was the highest (the listing agent probably should not have been telling us that). I kept in close contact with the listing agent and asked for an update each week. In late April we were advised that the bank was looking for my client's "highest and best" offer. This is typical in both short sale and foreclosure listings where there are multiple offers. After submitting this to the listing agent we were told that my client was still the highest bidder.

After several weeks of more waiting I was informed last week that the bank was accepting the other lower offer instead of my client's offer. While this does occur for various reasons in real estate short sales, I am taking steps to ensure that we were involved in a fair process. While we are currently a back-up in case the accepted offer falls through, I could lose this client due to his lack of faith in what's happening in the Chicago real estate market today.

Experience Counts
Purchasing distressed Chicago real estate requires an experienced buyer broker that understands the process and can guide you through situations similar to those discribed above. If you do choose to make an offer on a short sale you should continue to look at other properties due to the high level of uncertainty involved. I also recommend that you obtain experienced legal counsel to thoroughly review the transaction for potential pitfalls.

Chicago Discount Realtor
Closing Cash Realty is a Chicago discount real estate brokerage firm offering low-cost Realtor services to both buyer and seller clients throughout Chicagoland. We offer cash-back real estate rebates to our buyer clients and a low-cost, full-service listing plan to our seller clients.