10 best cities to buy short sale homes

3. Chicago-Naperville-Joliet Ill./Ind./Wis. (33.5 percent)

Ann Hermes/The Christian Science Monitor/File
Tourists take photos of their reflection in The Cloud Gate, a public sculpture by artist Anish Kapoor, otherwise know as "The Bean" near Millenium Park in downtown Chicago in this file photo. In the Chicago metropolitan area, home buyers can find some of the deepest discounts in the US on both foreclosed and short sale homes.

In addition to a deep average discount on short sales, the Chicago metro is one of the top places to buy foreclosed homes, with an average discount of 49.1 percent. Chicago sold 2,409 pre-foreclosure homes in the fourth quarter of 2011, at an average sale price of $156,349. That's a 28.9 percent increase from the fourth quarter of 2010.

Blumquist notes that the big winners in the shift to short sales are the neighborhoods. A number of foreclosed homes can doom the value of other properties nearby, because they usually sit vacant for several months and deteriorate. Homeowners who agree to a short sale get to stay in their house while it's on the market, maintaining its condition and more of its value.

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