The median sale price for a home in Chicago, Illinois, was $300,000 in January 2023. The same study from Redfin says that 1,283 homes were sold in the same month. Now is the ideal time for short selling your property in Chicago.
If you're new to short selling, you might wonder what it involves. What should you expect? What should you look out for?
A short house sale can be complex, but our guide will help you. Read on to get started.
What Is Short Selling?
Short selling is a means to sell your home without the funds to pay your full mortgage. In this situation, foreclosure is a risk, and it will damage your credit rating. This would make future credit and mortgages hard to find.
With a foreclosure, the lender takes back possession of the property. They then sell it to try to make back their costs, but it is a complicated process, time-consuming and stressful. The lender may still struggle to get back the full mortgage amount.
With a short house sale, the lender agrees for the borrower to sell the property for less than the mortgage amount. This still fails to recover the amount owed, but it is easier than foreclosure proceedings.
The lender gets the whole sale amount from the property. They can choose to settle at this, or they could pursue a deficiency judgment against the borrower to recover the money.
What Are the Benefits of Short Selling?
The property sales lender gets back money faster than with a foreclosure. They may get a larger amount, and they can avoid legal hassle and costs. For real estate investors, short selling your property means they can get it back on the market faster, reducing downtime and cutting losses.
For borrowers, they will protect their credit score to an extent. Short selling may still affect the score, but foreclosure would be much more damaging. They get to move out and look for a new place to stay if they have the means.
What Are the Risks?
For real estate lenders, a short sale still leaves you with less than the borrowed amount. Even with deficiency judgment proceedings, recovering the money could take a long time, and legal costs add up too.
Unless the owed amount is significant, it could be best to move on. You could also work with property management specialists who can handle this for you. These firms have legal contacts and can streamline the process.
For borrowers, the risk of short selling is greater in many ways. It is a better option than foreclosure, but they will still be left without the funds to buy another property. They may have to rent or look at other options depending on their financial status.
Borrowers may still face legal proceedings in the form of a deficiency judgment, but unless the owed amount is essential to the lender's business, many choose to forgo further action.
Make Real Estate Sales Easier Today
Short selling is a convenient way to sell your home when you're struggling to pay your whole mortgage in liens.
GC Realty & Development offers full-service property management to make your real estate investments a breeze. We pride ourselves on responsiveness, communication, and stellar customer service.
Local knowledge is key to real estate sales, and we have been based in Illinois since 2003. Contact us today!
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