Short Sales, Foreclosures and Investing in the Suburbs

In a single day, a REALTOR® can go from a stressful meeting with a family losing their home in foreclosure to a session with investors eager to take advantage of falling prices in the real estate market. Even in the most tranquil suburbs, this multi-layered reality is playing out every day.

I recently conducted a planning session with a group of new real estate investors: young homeowners thinking about buying real estate other than a primary residence. Once again, I heard a young man mutter: "Can you please just tell us what to buy."

I truly believe in the value of professional real estate services, but I will never tell people what to buy. I can offer property buyers the data and analysis for investing and possibly building wealth for the future.

New investors need to establish the level of risk that they can tolerate. There are no risk-free investments. But the prices for houses and condos in many markets have dropped so dramatically that there are great opportunities for new investors with some available capital.

More people are looking for rental properties in good neighborhoods as the lending market remains constrained and as more people lose their homes to foreclosure. Even transferees with great jobs are more cautious these days and ask about rental properties. The better the neighborhood, the better the opportunity for an investor to rent the property acquired at a distressed price.

In the western suburbs of Chicago, home prices have dropped 30% in the past five years...and many believe that we have yet to see the bottom for short sales and foreclosures, even in our most prosperous communities. Previously high-income families have been using savings to pay for shortfalls in living expenses after cutbacks in salaries, commissions and bonus income.

Many of the recently listed homes are "underwater": the homeowner owes more than he can sell the property for. Many of these homes are lovely, well-maintained and desirable, but will never sell at the 2005 price levels that they are mortgaged against. These will be become the short sales and REOs of the next two years.

REALTORs®  should be simultaneously serving the hidden distressed homeowners and working aggressively to uncover good opportunities for their investor clients. What could be better than local residents investing  in and supporting our communities?

If you are thinking of buying or selling in the western suburbs of Chicago, including St. Charles, Geneva, Batavia, Elburn, South Elgin, Wayne or Bartlett, please call me at (630) 945-7935. I commit to providing you with honest answers and opportunities for managing your best interests in this difficult economy.