I just took another course today in short sales and foreclosures taught by Marki Lemons in our Rubloff Residential Properties Mag Mile office. Short sales occur when the lender accepts less for the property than is owed on the loan. The short sale is negotiated with the lender so a sale occurs before a costly and lengthy foreclosure process. A foreclosure is a legal process which results in a forced sale of property. It is rare in my opinion that a property in Chicago which sells as a short sale or foreclosure is an actual "deal" for the average buyer. If you have some ability for sweat equity, great flexibility and have some risk tolerance, then you may get a decent price for your circumstance.
Of course, it also depends on your use for the property. It may be your primary place of residence, or it may be a buy, hold and rent. In any case purchasing one of these properties offers little guarantees for the weak of heart. The time-line for a closing can be 6 months to a year... sometimes longer once the purchase process starts.
The statistics are out there... these types of sales will grow. Just know it ain't the dream... it ain't for getting rich and it may not be the way you should make your first home purchase or property investment. Education of the process and realistic expectations can make this an option for the right buyers.
For instance, I don't expect to have to sell my current home to buy my next. It is also my desire to renovate my next property with my own finishes. I will have the time, flexibility, proper expectations and risk tolerance to pusure a property approved for short sale and one that is in foreclosure. These properties in a desirable neighborhood would be too expensive for a flip, but could be a good price for a buy, renovate and "live in" because they will have less demand to the general market thereby keeping the price a little lower than market.