Bruce, Other/Just Looking in 33880

OK. I read one thing on one website then something different on another. I continuously hear that short sales

Asked by Bruce, 33880 Thu Dec 25, 2008

are difficult because the seller's lender will not cover the buyers closing costs. Yet I have heard that if the market is filled with foreclosures (as it is now) that they might cover the closing costs to get a sale. What I am wondering is why my lender (the buyers lender) would not cover closing costs on a short sale. My lender said they would cover closing cost but they never mentioned whether that included short sales which my real estate agent said they won't. Can anyone help? I know about all the other drawbacks to a short sale but I do not understand why my lender would not cover closing costs.

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MeLynda Rink…, , Lakeland, FL
Thu Jan 6, 2011
Bruce,

It has been a long time since you wrote your question and things have gotten interesting out here in real estate land. Typically, when you as the buyer want to include your closing costs in the sale there are two ways to do it. One is to ask the Seller to pay for everything or you can get a mortgage that is higher than the asking price to be able to include those closing costs. There is a middle ground that we often look at and that is where your offer is higher than listing price (or higher than the actual price you want to pay) and then you bump up for your closing costs and offer that price and ask the Seller to pay your closing costs. In this scenario you are actually paying your own closing costs via your mortgage but you do not have the out of pocket costs that you would typically encur by just paying for your own closing costs at closing.

A few things to be aware of in doing this: First, the house has to appraise at or above the price you have offered and if it doesn't then you are going to have to rewrite the contract at a lower price or say no thank you and move on to the next property. (you have probably spent a lot of money on home inspections and the appraisal so make sure you can afford to lose that cost if you decide to back out of the deal. Secondly, as for the short sale end of this, it is rare that a bank will agree to more than 3% of the sales price as an amount they will be willing to pay for in the process. Some will do 6% but they are the rare bird in the flock right now.

I would have a very indepth conversation with my lender if I were the buyer and explain to them exactly what it is you want to do and make sure that they can accomodate your ideas in with their lending guidelines.

Without bumping up and asking the Seller to pay for your closing costs I HAVE seen the Buyer's bank or mortgage company be willing to roll your closing costs into your loan. For instance, you offer $100,000 on a home and then pull a mortgage of $106,00 to be able to roll your costs in to the mortgage. The house will have to appraise at $106,000 or higher for them to do it. 6% is the most a bank will ever approve in my experience.

You need to go into it with your conversations very much on the table with your lender to be able to accomplish this. They know the guidelines and unless your Realtor is also a mortgage guru, they may not be up on the changes in the mortgage industry on a daily basis.

Have you found a home yet and did you buy a Short Sale?
0 votes
Jane.Sweetpe…, Agent, Winter Haven, FL
Wed Aug 25, 2010
It all depends on each & every lender's situation. They have to consider several factors: the offer price, the amount that is owed, what type of loan you have and who you're lender is.
I have the only certification for short sales that is approved by National Association of Realtors. I am a certified Short Sale & Foreclosure Resource agent and have successfully handled many short sales. Each has been a different experience. I am in the process of negotiating 4 short sales with 3 to be approved any day now. Several Short Sales that I have handled have had a 2nd lien. You want to make sure you use an agent that has had a successful record with short sales. I can be contacted at (863)508-1762. If you already have an agreement with another agent, I cannot assist you due to the code of ethics; if you do not, I would be more than happy to speak to you. Jane "Sweetpea" Sasinek, Realtor, CRS, SFR,SRES
0 votes
Rod Bostic, , Lakeland, FL
Thu Jun 4, 2009
THAT IS SOMETHING THATS NORMAL DEALT WITH ON THE SELLERS END. THE NORMAL LATELY HAS BEEN 3 PERCENT ON THE SHORT SALES AND 6 PERCENT ON THE BANK OWNED.
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