Home Buying in 90212>Question Details

pattymatt2003, Home Buyer in Los Angeles, CA

How much "totally" buyers have to pay for short sale? and set contingencies on offer forms?

Asked by pattymatt2003, Los Angeles, CA Mon Jan 21, 2013

1. Since a short sale is more complicated than a standard sale, sellers(house owner) or lenders may not pay something, like termite, home warranty...etc. Buyers usually have to pay by themselves. My question is, if a short sale price is $900,000. How much should a buyer (with down payment $550000 and mortgage $350000) expect to pay "totally" for this house? I mean, including escrow, mortgage application(without point), home inspection, or anything I don't expect...etc.

2. On short sale, usually buyers can not set some conditions on offer form like standard sales. Is there anything buyers can ask for? like ask title insurance from seller? or set contingency upon loan approval... etc.

3. In most cases, who pay buyer agents fee?

Many thanks for your answers, and any reminder about short sale is very welcome.

Help the community by answering this question:

Answers

11
Marie Dinsmore’s answer
Don't focus on the miscellaneous costs, Here's why:

In your case, it would appear that the mortgage being shorted is a "non-conforming loan". Or jumbo loan in other words. that means loan is not owned by "Freddie Mac" or "Fannie Mae". That's important. Because, whatever bank or investor owns the loan (not necessarily the loan servicer) can play by their own rules…no government controlled entity is making rules for them.

In my experience, Jumbo loan banks and investors primarily care about the minimum net payoff they are willing to accept. You can often get them to allow for "seller paid" closing costs, but it will come out of the banks allowable net.

The net the lender will accept is based on the lender's current opinion of fair market value (FMV). Not usually the existing loan amount. The lender will either get an appraisal or a "broker's price opinion" to arrive at what they BELIEVE is FMV.

Commonly lenders will accept AROUND 85% of FMV as their net payoff. That varies from lender to lender. I've found that jumbo lenders however will often accept less than 85%. Some as low as 50%. But more likely 65% - 85% of FMV. This depends on a lot of factors including local market condition and how many foreclosures the lender is holding...and more.

The IMPORTANT part is IF the lender will take a net payoff of 85%, you can take all of the costs on the settlement statement that are payable by the seller, add them to the minimum required lender net, and that will equal the sales price. So if you want the lender to pay closing costs, add them. But expect the lender to require a higher sales price typically.

So if you have funds to pay for closing costs, and it sounds like you do, I would recommend excluding them from the negotiation. The easier it is for the lender to review and understand your offer, the more likely you are to gain acceptance. So keep your short sale offers clean. Concentrate on getting the lowest sales price, because in the end, you will have to pay the closing costs either way….whether you bring cash to closing, or you pay a higher sales price.
0 votes Thank Flag Link Tue Jan 22, 2013
Hi Pattymatt2003,

The answer really depends on a lot of factors, including which bank you are dealing with. It also depends on what the bank considers fair market value of the property. I don't think anyone can you give you an exact figure, as in everything in real estate things are negotiable. There are a lot of unknowns when you are purchasing a short sale, and until you have submitted your offer and it's accepted by the seller and then presented to the bank, there is really no way of knowing what the bank will or will not allow. Hope that helps!

Jodie
1 vote Thank Flag Link Mon Jan 21, 2013
I see incorrect answers all over the place here.

You can ask for & banks ARE agreeing to pay as much as 3% towards your closing costs, even on a $900K purchase price & even with a Conventional loan w/ a large down payment (be happy if you get 2% though), if there are multiple offers on the house this may be more difficult.

Banks sometimes pay for Termite reports & possibly also termite repairs, I always ask the bank to pay at least $1-2k for repairs & the $75 report. I don't always get it, but I will ask for it. In this price range it will be tougher to get it, I would just shoot for the 2-3% credit toward your closing costs instead.

Bank pays for back taxes, seller title insurance, real estate commissions & other normal seller closing costs. A note on back taxes - occasionally the bank will ask for a "cash contribution" from the seller to go towards this or just towards their total loss.

If the owner has an equity loan, expect that there definitely will be a 'cash contribution' requirement & the bank will "ask" the seller to pay for it, but you'll be the one bringing in that amount, because the seller is up a financial creek. This could be for as much as 20% of the equity loan balance that is being shorted. I can tell you if an owner likely has an equity loan & for how much.

Banks 99% of the time will not pay for a home warranty.

You can make your offer contingent on your loan approval & better yet, contingent upon the FUNDING of your loan. It can also be contingent upon a home inspection & verifying permits for any additions.

Shoot me an email directly if you'd like to talk about this further, I don't look back on this same Trulia thread for answers posted after mine.

Emily S. Knell
EmilyKnell1@yahoo.com
562-430-3053 c
Realtor Since 1996
Realty ONE Group
Short Sale Specialist - 100% success rate
1 vote Thank Flag Link Mon Jan 21, 2013
Hi Pattymatt2003,

The trick to purchasing a short sale is to make sure the seller and seller's agent have received approval from the bank and an approved minimum price. As a part of the process, the bank will do it's own approval and set a minimum price it will accept. If this happens after your offer is accepted and is higher than your offer price, you will have to come up in price or step away from the deal.

Short sales can be a bit of headache - they take several months and involve three parties (the bank, the seller and the buyer). That said, in this competitive market, more people are turning to short sales.

Good luck!
Annie
0 votes Thank Flag Link Wed Jul 31, 2013
0 votes Thank Flag Link Fri Apr 12, 2013
Hello,

I always recommend that buyers budget 3% of the purchase price to pay for their closing costs. In some circumstances you can get the seller to pay for all or a portion of your closing costs. Let me know if I can help further.

Thanks!

Andrew G. Belcher
Broker Lic. 01707173
468 N. Camden Dr.
Beverly Hills, CA. 90210
805-587-6577
805-620-3777 fax
0 votes Thank Flag Link Mon Jan 21, 2013
I agree to most Of the answers below, here's the breakdown:

1. Bank will usually pay for: title , transfer fees to county/city, escrow fees

Buyer will have to pay: buyer escrow fee, buyers title, points and all fees associated with the loan ;

as far as inspections and report it is usuallly responsibility of the buyer.

Some banks may pay for termite some won't. Usually bank would like to sell property as is.
Termite cost will depend on findings/condition.

2. Buyer can ask for everything - just like on standart sale, howevet a lot of demands mau not be approved by the bank.
Everything could be negotiated and it depends on many factors, such as: bank short sale policy, listing agent experience, buyers agent experience, bank internal workers, negotiator, asset managers, investors , etc...
I would ask bank to pay for as much as possible.

3. Bank will pay all agents fees.

Hope this info will help you.
In case you have particular property I can calculate buyers closing cost much more precisely - so you would know how much buyer can expect to pay in total.

Call Me 424-777-9377


____________________ 
Help with Any Real Estate Transaction - Buy or Sell  

Call me 424-777-9377 -  FREE CONSULTATION!  


Should you have any questions - please feel free to call me Toll Free: 1-855-TRUST-55 (1-855-878-7855)  ext. 777. 


Sergey Fednov 
President - Realtor® 
- Trust Sale Realty - 
Residential & Commercial Real Estate 
_______________________________ 
Toll Free: 1-855-TRUST-55 
Toll Free: 1-855-878-7855 
Phone: 424-777-9377 
Fax: 310-356-4925 http://www.TrustSale.com  http://www.TrustSaleRealty.com 
- We Hire CA Licensed Real Estate Agents - 
Lic# 01896869 
 
0 votes Thank Flag Link Mon Jan 21, 2013
The shorted lender will normally pay for title insurance, commissions and their half of escrow. Must other costs like termite and repairs are not often approved. The one big item that most banks will refuse to pay is delinquent HOA dues. Hope that helps.
Good luck,
0 votes Thank Flag Link Mon Jan 21, 2013
There are some good answer below. To clarify :1. Seller pays commission to both buyer's and seller's agent,2. Buyer generally buys home in "as is condition" hence all defects are generally a buyer's cost, 3. Title Insurance is a Seller's Cost, 4. Escrow Costs are shared Buyer pays own and seller pays own!
If you want to talk actual numbers please email me directly for a private consultation.

Endre Barath,Jr.
Prudential California Realty
Beverly Hills, CA

homes@endrebarath.com
310.486.1002(m)
Web Reference: http://www.endrebarath.com
0 votes Thank Flag Link Mon Jan 21, 2013
You should not pay ANY money... we sell multi-million dollar short sales all the time and very often get incentive money for our sellers to move out. We negotiate with all lien holders and make sure you are free and clear and there are NO DEFICIENCY claims against you... meaning no one can come after you afterwards for any losses... this includes HOA's, judgement's and any other lien on the property.

We negotiate everything for you and we get paid from the proceeds of the sale that would otherwise go to the bank... i.e. the bank pays our fees.

If you are curious see our latest short sale approval letter here...
http://www.facebook.com/pages/Short-Sale-Central/164458150241067


Call me at 310 691 3759 cell phone and I will be glad to answer any specific questions or give you any additional information...

Ron
0 votes Thank Flag Link Mon Jan 21, 2013
Hi Pattymatt2003,

In most short sales, the seller/bank will not pay for termite repairs or any repairs found during your home inspection. However, you can always ask for them if they are safety issues - especially with the price you are paying for the house. I would have your Realtor do a Comparative Market Analysis (CMA) on the property using SOLD comps within a 1 mile radius of the property (the closer, the better) that have SOLD within the last 3-6 months. This will give you current market value - this is what you should base your offer on, not on list price (unless it's the pre-approved price set by the short sale lenders). Have your Realtor submit a WPA (Wood Destroying Pest Addendum) with your offer asking seller/lender to pay for Termite inspection and if you want, ask seller/lender to pay for Section 1 repairs (safety items). Have your Realtor ask for you each to pay your own escrow costs. Most likely, they won't pay for a Home Warranty but I've had them do it so it's up to you if you want to ask them to pay for it. (A good Home Warranty will be less than $500). Have your Realtor ask seller/lender to pay for sellers Title Insurance. You can definitely have a loan contingency and I would highly recommend one. Commission (both seller's agent and buyer's agent) is usually paid by the seller/lender (even in a short sale). Have your Realtor do the SSA (Short Sale Addendum) with your offer. So, when you submit your offer, submit the RPA (purchase agreement), SSA (Short Sale Addendum), WPA (Wood Destroying Pest Addendum), Pre-Approval Letter for your loan, Proof Of Funds (copy of bank statement with account blacked out), and a copy of your Earnest Money Deposit Check.

Good luck.

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
0 votes Thank Flag Link Mon Jan 21, 2013
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer