Home Buying in South Natomas>Question Details

Joy, Home Buyer in Sacramento, CA

For an offer on a short sale - is it okay to ask seller to pay closing costs? Does that work?

Asked by Joy, Sacramento, CA Wed Nov 4, 2009

question about a short sale offer

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Becky A. Roenspie’s answer
Hi Joy,

Realize that it is the bank you are asking to pay the closing costs, not the seller. In a short sale listing everything is paid by the lender even though they are not the seller. The bank will sometimes ask the sellers to contribute if they have any assets or accounts with money in them. The listing agent can make or break the deal. If the listing agent isn't experienced in short sale negotiations and follow up, forget it! The bank will almost always pay all the title fee's because they want to use their own title company. As far as your fee's...most of the time they will pay up to 3%. I have only had ONE where they wouldn't pay any of them. I would definately ask unless they have multiple offers. In a short sale the bank will only see one offer at a time anyway. It's the sellers and their agent that decide which one to submitt.
0 votes Thank Flag Link Mon Feb 7, 2011
The bank should decide based on net proceeds I have had clients ask for closing cost and the bank has approved them. Ask for it if you need it.
0 votes Thank Flag Link Sun Jan 24, 2010
Depends on the bank. For a local small bank you will have a much better chance. Bank of America a definate NO! If your buyer really wants the house, the cleaner the offer the easier an answer.
0 votes Thank Flag Link Fri Jan 8, 2010
One thing I will say for sure - if you don't ask you don't even have a chance. As the other agents indicate most of the time the answer is no - but in rare instances the answer is yes. Last tear I worked with 6 shor sales and on 3 of them we got closings costs of 3% paid. Good luck to you.
0 votes Thank Flag Link Tue Jan 5, 2010
Most requests for closing costs are denied by the bank during a short sale. The negotiator is tryingto garner as much money for the bank as they can, this os one of teh first things they cut, after trying to cut the commission as well of course. What i have seen that has worked is say 3% back to complete repairs instead o staing closing costs, make sure you include pictures of teh repair along with 2 estomates to back up your case. You will have a better chance of getting your buyer some credit at closing. good luck
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Tue Jan 5, 2010
Hello Joy, realistically it is tough to get closing costs paid. On a short sale when you ask for closing costs, you are really asking the bank to pay for your closing costs. Usually 3% is a max that any bank will afford you. It can be done and your agent needs to know what the heck they are doing to negotiate things properly so as not to blow the deal up when they ask for the closing costs. I hope this helps. http://www.TheLaJollaLife.com

Justin Brennan - San Diego, CA
0 votes Thank Flag Link Tue Jan 5, 2010
Hi Joy,

Depending on your offer the beneficiary will pay up to 3% of the purchase price for the closing costs.

Best Regards,

Jes Sierra, B.Sc.
Century 21 Beachside
Chino Hills, California
0 votes Thank Flag Link Thu Nov 5, 2009
When a lender approves a short sale, the lender is actually accepting less money than the mortgage its self. Convincing the bank to pay for the closing costs is not likely to happen. Asking the current owners to pay for it, under the circumstance, it is most impropriety and perhaps fiscally impossible.
0 votes Thank Flag Link Thu Nov 5, 2009
Yes you can keep in mind all has be based on your lender approval and seller bank. Request is nothing uncommon just as long as listing/buyers agent understand terms including yourself.

Many times it can get confusing if not explained correctly.

National Featured Realtor and Consultant, Texas Mortgage Loan Officer, Credit Repair Lecturer
Follow me on Twitter: http://twitter.com/Lynn911

0 votes Thank Flag Link Thu Nov 5, 2009
Good Luck Joy. Keep us posted and let us know if your offer is accepted.
0 votes Thank Flag Link Thu Nov 5, 2009
Thanks again - everyone! All of your responses have been so helpful!
I have been looking at homes since April and have put in several offers. However, I've only put one offer in on a short sale and never heard anything back. So I've tended to stay away from even looking at them, as I know there is a lot involved and usually a very lengthy process. (One just came on the market, though, that I'd really like to look at so I thought I'd inquire and get your expert opinions and advice.)
Have a great day!
0 votes Thank Flag Link Thu Nov 5, 2009

Let's be practical.....the owners are in a short sale situation because of a lack of personal funds....does it make good sense to ask them to dig deep into the resources they probably do not have for your benefit.....

If there is extra money floating around don't you think the bank is going to show an interest in it?

As always, there's no harm in asking but I wouldn't get your hopes up.
0 votes Thank Flag Link Thu Nov 5, 2009
Hello Joy. As the others have already stated, you can ask and many times the lender will allow a buyer credit for closing costs. Many lenders will not give more than 3% of the purchase price. I am not saying it's not possible at all to get more, but it's much less likely. It's difficult to get the maximum 6% allowed by FHA lenders. I have also heard that buyer credits are not allowed when the seller's loan was a FHA loan. I can't confirm that because I have not had a FHA short sale. It's just something a short sale negotiator told me. In the current market, you'll encounter many multiple offer situations and it may take longer for you to get an acceptance as sellers will prefer an offer that is not asking for a lot of concessions since it's more likely that the bank will approve that offer. The more you eat into the bank's bottom line, the less likely it is that the short sale will be approved for the purchase price you offered.

Best of luck to you.

Ute Ferdig
DRE # 01326917
Ferdig Real Estate Solutions
Web Reference: http://www.themlshub.com
0 votes Thank Flag Link Thu Nov 5, 2009
Ute Ferdig -…, Real Estate Pro in New Castle, DE
Thanks everyone for your quick and thorough responses! That helps a lot!
0 votes Thank Flag Link Wed Nov 4, 2009
So many factors are taken into consideration by the short sale negotiator. So before you ask for the moon and the stars, here are things to keep in mind:

1) What is the market value of the property (remember that the negotiator will commission a BPO - broker's price opinion - to determine what the property is worth.

2) What is the balance of the loan - know how much the lender needs to "forgive".

3) How much is your offer compared to market value and loan balance? If you submit a low ball offer, the negotiator will be less inclined to accept the offer and grant credits Are you writing your offer based on fair market value?

4) What other expenses are you asking the seller (in this case, the lender) to pay? Note that most lenders will cover the selling expenses, taxes, insurance, but not necessarily repairs or replacements. In many cases, they won't pay for Homeowner Association fees and fines.

5) Are you writing an offer in a competitive situation where there are surely going to be multiple offers? If so, by asking for closing costs, assuming that your offer price is on par with the others, you may weaken your offer with a request for closing cost credits which result in lower net proceeds for the seller

When you are asked for your best and highest offer, remember that highest offer doesn't always win. Sometimes, terms trump the higher offer. And in many cases, all CASH offer rules!

Good luck.
0 votes Thank Flag Link Wed Nov 4, 2009
It doesn't hurt to ask for the seller to pay closing costs. But, if other offers are submitted without asking for closing costs, "that" hurts your offer. In mutlipy offer situations, which is the norm in my area (So.Cal) it's best to go in with your highest and best offer. Sellers are always looking for their best bottom line.
0 votes Thank Flag Link Wed Nov 4, 2009
Sure - you can ask for closing costs to be paid by the seller. Ultimately the short sale lender(s) has the final say as to if that is permissable or not. Generally speaking the cost of the credit for your closing costs will be factored into the overall cost of the sale.

In all of the short sales I have negotiated and closed, only once has the short sale lender ever not allowed seller paid closing costs. One other time, a short sale lender reduced the allowed amount paid for closing costs. That's 2 of around 20 transactions, plus others that are not yet closed.

Good luck to you...
0 votes Thank Flag Link Wed Nov 4, 2009
Erin Stumpf…, Real Estate Pro in Sacramento, CA
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