What does "Total closing costs not to exceed" mean in a short sale approval letter.?

Asked by Maria Kumar, Broomfield, CO Sun Oct 13, 2013

I am trying to purchase a short-sale from Bank of America in Colorado. The difference between agents' commissions and total closing costs not to exceed is about $9000.

What is this $9000 for? What closing costs is the bank usually responsible for? How can I make sure I get the best deal here.

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Sally Grenier’s answer
Sally Grenier, Agent, Boulder, CO
Mon Oct 14, 2013
What does your Realtor say? Hopefully you have a Buyer's Agent working for you. As others have said, it's hard to tell without seeing the contract, or being part of the transaction. What was the sales price of the home? If you asked the seller (B of A) to pay your closing costs, then this is their response to your request. It sounds like the total of agents' commissions AND closing costs cannot exceed $9K. It's very common for the bank to reduce the agents' commission amount on a short sale. They typically only offer a certain percentage of the sales price, and the agents have to split that 50/50.

As far as your comment about getting the best deal....guess what? You're going to get whatever the bank is offering. And you can either take it or leave it. It may or may not be "the best" deal. This is why I tell all my buyers that buying a short sale isn't always a great deal. The bank will only allow the sale if they are getting "fair market value" -- basically what other homes have been selling for in the area.

Again, hopefully you're being represented by an agent? He/she should be the one answering your questions. If not, sounds like Yve is willing to look at it for you, which is very generous.
0 votes
Yve Roberts, Agent, Denver, CO
Mon Oct 14, 2013
Hi Maria,

I would be happy to investigate the details of that specific home for you but from what you have shared, it is likely they are saying the total of agent commissions and seller paid (BoA) closing costs could not exceed $9000. The closing costs include fees related to getting a loan, fees paid to title companies for closing on a home, pre-paid taxes and insurance. Agent commissions are a percentage of the price of the home paid by the seller - Bank of America.

If you are not currently working with a Realtor, I could review the details of the home with you. Please feel free to reach out to me. Good luck,

Yve Roberts
PorchLight Group Real Estate
1 vote
Robert McGui…, Agent, Denver, CO
Sun Oct 13, 2013
Hi Maria,

As always, I encourage you to speak with your Buyer's Agent. The closing costs can refer to prorated taxes, lawyer fees, title costs, and all of the traditional seller closing costs. Did you ask for Buyer closing costs to be paid? It is so hard to answer a question like this without seeing the contract and related documents. If your Buyer broker can't give you specifics, have him confer with the managing broker. Also he can ask for info from the listing broker and at some point confer with the title company. You are entitled to know and have a full understanding of your costs in particular. Once the approval letter is sent, there is usually very little negotiations that can be made at that point. especially when you are dealing with BofA, which I consider the worst Short Sale Bank to deal with. Congratulations on getting this far and all the best from here.

Robert McGuire
Your Castle Real Estate
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