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Short Sale Closing Costs

In the case of a short sale, does the bank ever pay closing costs? Are they negotiable? Thanks so much for any info!
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March 08 2011 - Weehawken
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Answers (7)

Banks do contribute to closing cost, at one time it was up to 6% but now we are seeing 4.5% as the norm, to help control your closing cost watch the mortgage closing fees. hope this helps,
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March 08 2011
Wow, sounds as if you are getting a lot of recommendations from Realtors that do not complete many short sale transactions.  Myself, I have listed and sold all of my 60 plus short sales in the last four years and on EVERY short sale, including the Freddie or Fannie short sales, the bank pays for all closing costs for the seller and Realtor commissions at the closing.

The reason for the short sale is because your Realtor with the info provided by you, will prove the case to the bank showing that you truly have a financial hardship and you are truly a short sale candidate and this is why you are selling the home before your home goes to foreclosure.  Banks prefer short sales over foreclosures because the condition and value of the home is more intact with current market conditions and give more value back to the banks than a foreclosure would. 

If your Realtor proves the hardship correctly to the bank, the short sale will be approved to close via a regular short sale or a HAFA short sale.  If you can prove the hardship, how can a bank ask you to pay for the closing costs?  If you could actually pay for the closing cost, there is a chance you can make payments to the mortgage!  If the short sale was approved and the bank didn't agree to pay for the closing costs and the commissions for the Realtors, your attorney or whoever prepared the HUD statement for the bank didn't do it correctly.  The bank, especially in short sales, won't tell you that the HUD statement was prepared incorrectly. The bank wants to only make sure they are receiving their net proceeds from the sale of your home. 

The correctly prepared HUD comes from an experienced Realtor and/or Attorney that's working your home.  Surprisingly, most Attorneys don't know how to execute short sales either.

Contact me if you have any questions.
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March 08 2011
Every Bank is different and they all have their own policies.  Some banks will probably be fine with fronting some cash for the closing costs.  On a Fannie Mae owned property, your buyer will probably be stuck with all closing costs, including the full 2% transfer tax.
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March 08 2011

Banks will usually pay closing cost. Exception to this rule if loan is
FHA loan. In this type of loan a preapproved short sale is given,but
the lender will not pay closing cost.

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March 08 2011
In many cases I have seen the lender pay for seller's closing costs, but they would need to be included in the original offer.  Often times it comes down to the appraisal and if they have any room in their allowable percentages.
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March 08 2011
Many lenders will agree as part of the short sale approval to closing costs if written into the contract.  However, it is likely that they will put a limit on how much they will pay towards costs and it may not cover all of your closing costs.
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March 08 2011
yes banks will pay closing cost if you write it into an offer .. i have seen a few cases where they wont but in most cases they will . Just make sure you write it into the offer when you write one ..
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March 08 2011
 
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