How to shop for a short sale

Investors buying up properties with wads of cash. Outsized loans for palatial spreads. Open houses drawing twenty buyers to the first showing, and bidding wars galore. With average time on market down 25 percent and inventory shrinking 31 percent from this time last year, it’s clear that the real estate rush is on. No wonder — buyers chilled by the recession now face a ticking clock. A 30-year fixed-rate mortgage was 4.59 percent at the end of July, up from 3.74 percent before Memorial Day. This week, Grid profiles five buyers who have waded into a market that’s shifted rapidly in the last 18 months, describing their challenges and pairing them with professionals.

The bargain hunter: Michelle Zell, 30

Real estate agent: Maureen Hale, United Real Estate

Price range: Not disclosed. Similar properties in the area sell for $150,000 to $300,000.

Problem: Zell, who works in marketing, urgently wants to move out of the two-bedroom, one-bathroom condo she rents with her boyfriend in Palatine, and not just because she wants to own. “Because of the housing market crash and the recession, the neighborhood went from okay to really bad,” she says. “Cars have been broken into, people have been robbed.”

She wanted a larger place, preferably with three bedrooms, two bathrooms and a finished basement, where she could eventually raise children and not feel cramped for space. In addition, she hoped for a yard with an outdoor dining area. Her boyfriend plans to move in with her and pay rent.

While she was open to the idea of a short sale — a deal where the bank holding the mortgage agrees to accept less than the current owner owes — she was worried about being taken advantage of by scam artists. ““It can be a little scary,” she says. “Like it’s shark city out there.”

Realtor advice: Hale counsels patience — a difficult strategy in a rapidly shifting real-estate market. “People are going back to the traditional sale because they don’t want to wait, but if you have the time for a short sale, you’re getting the biggest bargain for your money,” she says. Picking up a distressed property also helps to counteract a common mistake among younger buyers, which is purchasing the most expensive house their mortgage lender will approve, leaving them cash-poor for years, she says.

For a short sale, plan for discussions with lenders to take as long as three months, Hale says. Ask lots of questions, and be prepared to spend plenty of time searching. Buyers shouldn’t get so carried away with the thrill of the deal that they start overlooking major flaws in a property.

Result: Zell is negotiating a short sale for a townhouse in Arlington Heights, though she’s anxious to talk about it while the relatively complex deal is still pending. “I grew up in a place two doors down from this, which sounds really funny,” she says. “My parents are divorced, my dad lives far away, and the house near where I’ll be living was my mom’s place, where I felt most comfortable. There’s a sense of peace. I’ve been longing for that since I left.”

This week, Grid profiles five buyers who have waded into a market that’s shifted rapidly in the last 18 months, describing their challenges and pairing them with professionals.

Monday: The rookies

Tuesday: The empty nesters

Wednesday: The nest-builders

Thursday: The bargain hunter

Friday: The bidding warriors