As part of the Short Sale or Pre-Foreclosure Program, the Short Sale lender will cover most all of the closing costs on behalf of the homeowner(s), as well as the real estate agent commissions.  Most lenders pay a total of 6% in agent commissions, however, we have encountered a few that pay less.  There are a few closing costs that the lender will not cover on behalf of the Seller, such as the cost of a home warranty if requested by the Buyer, HOA transfer fees and certificates, and any delinquent HOA dues.  If the bank is offering a Seller Incentive, the incentive can be used to cover any costs that the bank will not.  If the bank is not offering a Seller Incentive, the homeowner will have to take care of these expenses prior to closing.  The bank will usually cover any delinquent taxes on behalf of the homeowner, as long as the sales proceeds are sufficient to cover them.  Remember, if there are any delinquent taxes, you will need to increase your list price to account for these costs that will have to be deducted from the Sale Price at closing. 

The Short Sale lender will absolutely, under no circumstances, cover ANY closing costs on behalf of the Buyer.  This will likely be something you will have to explain over and over to Buyer's Agents, and you should expect them to argue with you incessantly.  What they will typically want to do for their Buyers is just gross-up the Sales Price on their client's offer so that they can roll-in the Buyer's closing costs.  In a Short Sale, the Seller's lender will not allow this.  Trust us, we have tried every which way to make this work, but the lenders will absolutely make no exceptions.  The bank's position is that if they are going to take a hit on the Short Sale, and therefore the Buyer is going to walk into this property with some equity, they are certainly not going to contribute to any of the Buyer's closing costs, no exceptions.  The Short Sale lender also will not allow the Seller to contribute any monies on behalf of the Buyer.  The lender's position on this is that if the Seller had any monies on hand to contribute to the Buyer's closing costs, the Seller should have used that money to make their house payments!  Do be aware that there have been recent changes in HUD/FHA guidelines now allowing the Buyer to cover certain closing costs that were previously considered "non-allowables" and requested to be paid by the Seller.

America's Home Rescue

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