Price,
The entire concept surronding short sales is ill conceived and entirely created by mortgage backers who have missed the concept of restructuring a mortgage. These same institutions have stashed 700 billion of our tax dollars to cover their expenses. The tax payer, if I read the banks responses accurately, is expected to say 'Thank you very much" and go away.

It appears to me short sales create an environment where the desperate are further victimized. The home seller, when agreeing to participate in the short sale process, is walking into 16 years of financial purgatory. The benefit to the home seller is so extremely marginal as to border of fraudulent. The short sale option simply further victimizes the victim. The stink from these transactions will hang in the air over the real estate profession for decades.

If you are a home owner in a real bind or a real estate professional who needs seperation from this morass there is hope. There is a "right" way to serve home owners that will perserve your integrity and bring real value and resolution into the situation. If you have interest, drop me an email with your affiliation and contact information and I'll get back to you.
Annette Lawrence
ReMax ACR Elite Group, Inc
l.oatka@gmail.com

Short sales are so silly you may want to just avoid them. There are other good deals out there with less B.S. attached to them.

True story #1 - "No more short sales!": Before I learned better, I had a buyer who put in full price offers on 2 short sales. On one, we never heard back. On the other we did after a month or so. They went with another offer. Having had enough of this, we agreed, "No more short sales!" I found him just as good a deal the next day. The owner just wanted out. My buyer now lives in the house.

True story #2 - "Incompetent": I had 2 short sale listings, both owned by the same owner. The owner took my advice on the price and we got pretty good offers on both of them in about a month ("Price It Right and You're Done!"). The banks were so incompetent they couldn't put the deals together. They wanted more for these now-run-down houses than they were worth when they were first listed. One of the bank's representatives was so bad he gave me a number that I couldn't get through on as his contact number. Eventually the owner and I gave up. No more short sales!

You may want to read the latest article about short sales in the St. Petersburg Times - it will explain why there is a mitigation fee.

First there may be an investor who has negotiated the short sale and then used a realtor to find a buyer. The negotiation and market prices may have gone below the amount the investor needed to close the deal and make money so they may have backed out of their contract allowing you to close but since they started the transaction - they are charging you a mitigation fee.

Second the realtor may have used a negotiator - not every real estate agent can negotiate a short sale well and uses a third party. If the bank has refused to pay the fee - someone has to since they go you the price you are looking to pay. If the buyer made an offer that is below asking and additional negotiation occured - this comes with a price.

Every transaction comes with its own little differences and costs - if it is a fee that you don't want to pay and it is enough for you to walk away from the house - then it is up to you. It just so happens that you picked a house that had an additional fee but if it is a good property and you love it - and the price is right - you have so much more going for you then a fee to someone who did a lot of work for you and the seller. It may not be fair but the seller is losing their house and you are probably getting a 5% rate and 8K buyer credt from the Federal government. Add up all the positives and negatives before you make a hasty decision - and look at the whole picture - can you really beat the prices right now? Good-luck in your home purchase.

Andrew
If Annette is right and this is a fee for the negotiator I find it outrageous that you are supposed to pay for it.
Who ever hires the negotiator should pay them. Usually either the seller or the Realtor hires them. Do not fall for this. It should NOT be your expenses.

Andrew
This sounds strange. I also do short sale and I have never heard about a mitigation fee. Who quoted you this fee? Realtor or lender or bank?
go to my website if you want, there is a huge Q and A section

Andrew, the mitigation fee is paid to the negotiator dealing directly with the lender(s).
These fees will be popping up under a variety of names as more restrictions are placed on transactions of this type.
Why do you have to pay this? In the overwhelming number of shortsale situations the seller has absolutely no funds to contribute. The negotiator is the most crucial element in the short sale process. Your trusted real estate professional can advise you concerning your options in these short sale transactions.