Short Sales in Chicago on the Rise

April 29, 2012

Short sales made a huge leap in the Chicago real estate market at the beginning of the year. Lender Processing Services Inc., a Jacksonville, Fla.-based firm that provides extensive data for mortgage lenders, released data showing that short sales made up 20.1 percent of all sales in the Chicago area for January.

New Price PhotoSo what exactly is a short sale?  It is an alternative to foreclosure in which a seller’s mortgage lender agrees to selling a property for less than the balance due on the loan.

But then why aren’t the millions of Americans facing foreclosure opting to go for a short sale?

In order to be granted a short sale by a bank, the seller must prove two important things:

  • The seller must prove a hardship such as unemployment, divorce, medical emergency, bankruptcy, etc.
  • The seller is underwater on the mortgage meaning they owe more on the mortgage than the home is worth.

With short sales accounting for 20.1 percent of all sales in January, it is the highest monthly percentage since Lender Processing Services Inc. began collecting Chicagoland short sale data in 2007. The figure is up from 13.6 percent a year ago January.

The emphasis on approving short sales shows that the Chicago market still has a ways to go in its recovery from the housing crisis unleashed five years ago. Having lenders sign off on short sales is a way to get the distressed homes off their books, albeit at a loss, instead of having to labor through the time consuming and costly process of foreclosing on the homes and then trying to resell them on the market.

While short sales are not a knight in shining armor by any stretch, with lenders taking a loss and homeowner’s credit rating taking a hit, it is often a favorable option compared to foreclosing. And in this current market, it looks like short sales will be a fixture in Chicago real estate for the foreseeable future.

About The Author

Read All Stories By Mitch Levinson

Mitch Levinson is the author of “Internet Marketing: The Key to Increased New Home Sales” published by BuilderBooks. He is an Internet marketing expert with expertise in search engine optimization, website development, email marketing, social media and CRM consulting services. He is known for creating effective programs that can be tracked through analytics to prove effectiveness and ROI. Mitch is founder and president of MLC New Home Marketing and MLC FlatFee Realty, as well as managing partner of mRELEVANCE, LLC, a Marketing, Communication, Interactive agency with offices in Chicago and Atlanta. He currently leads the Chicago team. A Multi-Million Dollar Sales Producer who earned an MBA in Computer Information Systems and eCommerce, he brings a unique perspective and experience to the field of real estate communications. Mitch combines the two interests in order to help home builders and developers gain a competitive advantage through the Internet and technology. When he isn’t behind a computer, he enjoys participating in sports and coaching his kids’ teams. Mitch resides in Arlington Heights, Ill., a northwest suburb of Chicago, with his family, which includes two rambunctious labs. Visit my Google+ profile.

Leave a Comment