Home Buying in Claremont>Question Details

Astrby, Home Buyer in Pasadena, CA

How much leeway do I have during escrow with the bank to negotiate an accepted short sale offer.?

Asked by Astrby, Pasadena, CA Tue Dec 22, 2009

We made a $480k short sale offer that was recently accepted. The bank letter states as one of its conditions is that (a) it receives a minimum of $433k from the sale (to cover the 1st & 2nd Lien); and (b) the agent commission is capped at $29k. This totals $462k. By my read, this leaves $18k to cover various taxes and transfer fees. Is it safe to assume this won't eat up the whole $18k and that they might be willing to pay for the $2k worth of termite work we just discovered or the home warranty plan we asked for in our offer? In terms of who makes these decisions, since the sellers don't have anything to gain, if these requests can be covered by the remaining $18k, is it the selling realtor who will decide whether to take a hit in commission to make this work or do will (s)he take these requests to the bank?

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The net to the bank is calculated on very slim margins. When the short sale lender issues the approval, the net they agree to take is based on a HUD-1 (estimated closing statement) prepared by escrow, already whittled down to the very bare minimums of all costs and fees (for example, Bank of America will only pay $750 in escrow fees, even though escrow fees on this purchase price would be between $1050 & 1160). If there is $18,000 over and above the approved commissions on the sale, that is because there are $18,000 of costs and liens that need to be paid in order to transfer clear title. And, if it was not on the approved HUD, then the bank will not pay for it.

Short Sale Banks, as a rule, do not pay for termite or home warranty. Your agent should have made this clear at the beginning of the transaction. They will only pay for items required to transfer clear title (which might include City Reports and Retrofits, health and safety issue, senior liens, etc.). The Short Sale lender is being asked to take less than what is owed to them so that you can buy the house. If you negotiated well, you should be getting a great deal on the house. Would you want to tank this deal over $2,000 in termite work?

All that being said, everything is negotiable. Although in short sales the bank, pretty much, holds all the cards. You can request these costs and have the listing agent present them to the bank. Your chances of having them paid are slim, but if you don't ask, your chances are zero. Good luck. Hope you love the home you are buying. Dare to Dream.

Shel-lee Davis, CDPE
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
http://shel-lee.listingbook.com
0 votes Thank Flag Link Wed Dec 23, 2009
The listing agent should submit the request to the bank.

Not sure why the listing agent would have to take a hit on his commission since they are not buying the house. Why would the listing agent take a hit and not your agent?
0 votes Thank Flag Link Tue Dec 22, 2009
Cindi Hagley,…, Real Estate Pro in San Ramon, CA
MVP'08
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