Thursday, November 01, 2012

Common first time buyer issues when purchasing short sale condos

We recently represented a client in a purchase contract for a short sale condo in Lincoln Park.  Our first time Chicago buyer encountered several common "dilemmas".  There were also compelling positives (1) The purchase price of the unit was about $60,000 under many good comparable units in the neighborhood (2) This particular short-sale also had the coveted "bank approved" price, so, closing may be a little smoother and predictable. Each dilemma below would need to be weighed against the positives.
Photo Eric Rojas

Many buyers, like our client,  will run into these problems when purchasing a short-sale unit:
(1) The small 3 unit condo building was run informally with no meeting minutes, limited reserve funds and pro-activeness by the buyer's team was needed to make sure all ducks were in a row for the lender to make a loan in the building.

(2) The property inspection revealed some deferred maintenance to the common building areas.  Our buyer client (as an owner) may need to become more involved and influential in the maintenance of the building moving ahead.  The deal would need to be worth the cost of near term maintenance.

(3) Time.  As in most short-sales acceptance by the lenders and the closing date are unpredictable.  The contract required the buyer allow up to 90 days for the acceptance.  The buyer's situation would need to be flexible.
Photo Eric Rojas

Our investment minded client felt the good deal far outweighed these relatively small risks and moved ahead.  Even a more "market priced" unit could require similar maintenance costs...all buildings need proper maintenance sooner or later.  Bob and I presented options and gave our client some things to think about.  Ultimately, it's up to the buyer's risk tolerance, financial situation and desire to be in a particular location when it comes to a short-sale purchase. And if that location is Lincoln Park, that decision is made easier!