Who Pays Short Sale Closing Costs?

Who Pays Short Sale Closing Costs?

The short sale process can be a complicated and often confusing – but we are here to help. The top Tampa short sale real estate agents at Nathan Bangs & Associates are experts at Tampa short sales and as a Certified Distressed Property Expert (CDPE), Nathan Bangs can guide you through each step of the process including answers your questions about closing costs.

In a conventional real estate transaction the closing costs, while always negotiable, typically come out of the proceeds of the sale property which means less money for the seller. But a short sale is a different animal.

Typical closing costs can include:

  • Realtor commissions
  • Credit check
  • Appraisal
  • Conveyance taxes
  • Adjusted real estate taxes
  • Legal fees
  • Seller paid concessions to the buyer
  • Junior lien payoffs
  • Recording, wire, courier fees, etc.

Seller Closing Costs in Short Sales

In a short sale transaction, however, the lender will first qualify the short sale and must be willing to accept less than what the seller owes on the mortgage meaning they are going into the short sale knowing that no proceeds will go to the seller.

Lenders may allow closing costs to be deducted from the proceeds of the sale meaning, in fact, that they are paid just the net proceeds of the entire transaction. This means sellers don’t have to pay any of the costs out of pocket, but they also aren’t getting any of the sales money.

There are situations, however, where the bank may require a cash contribution from the seller in order to approve the short sale, especially if there are junior liens or judgment liens, but this is somewhat rare.

The fact is that in a typical situation the seller would pay no closing costs on a Tampa short sale. But this is also why many buyers often ask the seller for a closing cost credit so they won’t have to incur all of the costs. The buyer can certainly ask, but, because the short sale bank will need to approve any closing cost credit, even if the seller agrees the bank may not approve it because they hold the final say.

And remember that each lender is different when considering which sellers and properties qualify for short sale or not. Having a plan on how to make your situation more expedient and avoid common short sale mistakes can make the difference between a successful transaction or not.

Buyer Tips to Getting Credit for Closing Costs

The first thing a bank will consider when deciding whether or not to permit buyers to get closing cost credits is the sales price. Lowball offers may rarely get lender approval for buyer credits. Beyond that buyers should be aware that sometimes the bank will simply add the amount of closing costs on top of the sales price to entice the bank to accept it meaning it’s a push for buyers if they get the credit.

For buyers asking for closing cost credits it can be tricky because pay too much and it’s not a good deal. But if the sales price is inflated equally to the desired credits then the property may not appraise adequately to satisfy the lender. If the lender doesn’t get the needed appraisal, the deal is done.

But the big three situations where a bank is most likely to approve buyer closing cost credits are if the buyers are all cash, if they are conventional short sale buyers without mortgage insurance, or if they are minimum or no down payment buyers. For the latter two buyer situations the bank often takes into account the limited financial resources that the buyer may have available but they still want to get the deal done and get the short sale off their books. Remember, it never hurts to ask.

We’re Here to Help

Finding, qualifying for, listing, selling, buying and completing a short sale can be a complicated and often confusing process. The top Tampa short sale real estate agents at Nathan Bangs & Associates are experts at Tampa short sales and are ready to you find your perfect short sale buying opportunity or to help sell your home as quickly as possible.

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Contact Information

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Nathan Bangs
Keller Williams Realty
3502 Henderson Blvd.
Tampa FL 33609
For Buyers: 813-739-5925
For Sellers: 813-739-5965
Fax: 813.875.3701