Is Buying A Short Sale Home In Naperville A Better Deal?

short sale better deal

With the housing market we’ve had over the last decade, we’ve seen home prices rise and then drop extremely quickly.  This has brought about the phenomenon of the “short sale”.  Although a short sale is nothing new to a bank, it’s only recently entered the minds of many home buying consumers because the burst in the housing bubble has made this term common place in the media.

But is buying a short sale home in Naperville a better deal than buying a non-short sale?

Before I give you some insight on the answer to that question, let me first point out that a short sale purchase can be a complicated matter and this 800-word article is probably not the only research you should do on the matter.  There are no absolutes; each situation is different.  So, make sure you have an experienced real estate agent who can help guide you through any home buying process, especially a short sale. You should also make sure that you know what else is involved when buying a house. Do some research and find property management companies near me. It’s not just a short sale you need to be aware of, but also things like energy prices and things like that. You could, if you wanted, take a look at a site like if you do want to have a look at a comparison between energy providers before you buy your house.

Ok, enough with my brief disclaimer.  Let’s get on to the matter at hand.

So, what is a “short sale” anyway?  Glad you asked.

It simply means that the home seller’s lender has agreed to take less than what is owed on the home.  For example, let’s say Johnny Football bought a house in Naperville for $500,000 back in 2008.  Over the last few years he’s paid down $100,000 and so what he owes (his mortgage) is $400,000.  However, because that house is worth only $300,000 now because home values in his area have depreciated, Johnny Football is in a bit of a fix.  He owes $100,000 more than the house is even worth!

If he runs into problems paying (and/or meets a number of other qualifications the bank demands), the bank may attempt to avoid foreclosure by instead offering to take less than what is owed to release the mortgage.  They’ll take any money they can get, even if it’s short of the amount due.

Thus, the short sale.

Mortgages are a confusing thing for most people though. They can also be difficult to sort out. There are many different ways that you might get a mortgage for your house, for example, you might take a look at getting a mortgage note (also known as real estate notes) to show that you will repay the specified amount plus interest. Some people prefer to do it that way, however, they get confused when it comes to having to sell real estate notes. If this is the way that you want to do it, then you should. However, dealing with mortgage notes might be slightly different when dealing with a short sale. So it is important to make sure you do your research before you consider getting yourself a mortgage (and a short sale first).

On this surface, this sounds like a pretty good deal to the buyer.  Johnny Football’s Naperville home is priced below the average in the neighborhood because he really needs to sell right now.

short sale seller tied to a bank's approvalBut how much are short sales discounted?  How good of a deal is the buyer really getting?

In terms of a percentage, the buyer could see an average of about 10% off as compared to similar homes (this is just an average; all situations are different and may be more or less than this).

Let’s say then that Mr. Football’s home is priced at $270,000 (the $300K average value less the 10% discount for being a short sale).  That’s 30 grand the buyer just saved.  Or did they?

Monetarily speaking, yes, the buyers have the potential to save a good bit of dough.  But what’s the downside here?

Potentially, the risk of trying to get a deal is that you may have to put in a lot more patience, effort, and time to actually get to a closing.  You may extend the typical buying process from a month or two all the way up to nine to twelve months.  Here’s why.

In a short sale purchase, the home owner/seller is still involved, but they don’t have the final say like they would in a non-short sale deal.  So, as a buyer, you’ve got to go through the whole negotiation process with the seller and come to agreed-upon price.  But…then that price still has to be approved by the lender.  That’s when time can start to get really long.

The seller’s bank might be really on the ball and approve/deny the price you’ve negotiated in a matter of weeks.  Or they might take months.  Yes, months.

It’s not totally uncommon to wait 2 to 4 months just to hear if your offer was accepted or not.

And what if your offer is denied?  Yep, you guessed it.  You might have to start all over again.  This is why it might take you a year to finally close on that short sale house you were excited to get a “good deal” on.

So, is buying a short sale home in Naperville really a better deal?  That depends.

  • Is it the perfect house?
  • Is it really that great of a monetary savings as compared to similar homes?
  • Are you willing to play the waiting game and spend up to a year trying to buy this house?
  • Do you have the patience, energy, and time to potentially spend?

For some, short sales are a great deal.  Others not so much.

Keep in mind that this is an extremely abbreviated take on buying this type of home. There are many variables that I didn’t even touch on here.

Nevertheless, hopefully this guide has given you some insight on if it’s the right strategy for you.

Whether buying a short sale or not, get the help of an experienced Naperville real estate agent before you buy.  It’s free.

About John Reh

I moved to Naperville in 1981 and I love this city. As a Naperville-focused real estate agent, I publish this website to promote our community and help current and soon-to-be residents discover the best of Naperville homes and lifestyle. Contact me at any time.

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