I finally closed on a short sale that we started with in April. Yay! What a journey this one was. It should have been a simple one - Only One Lender and no equity lines. But trends seem to be twisting and turning every time we finally get the negotiation process figured out. This one I wanted to mention because my negotiator said they are starting to see a lot of this. The bank had approved the purchase price and even approved paying for the buyer's closing costs. BUT, a week later as we were hounding them for the approval letter, they stated that they are requiring a contribution from the seller. WHAT?!?!
Now, I am not arguing that they want to try and get what they can from the sale of the house. I understand that. My problem is this:
1) Shouldn't they have asked for that upfront when we were negotiating the price and closing costs with the buyer? They could have mentioned that they wanted the seller to pay $3500. At that point we could have said for the bank not to pay the buyer's closing costs, which just so happen to be $3600. That would have balanced out. Or, we could have bumped the purchase price up by $3500. The buyer would have paid it, they were willing to go higher if need be.
2) Secondly, where do they come up with $3500? They are already losing over $150,000 so what makes $3500 ok? We eventually got them down to $2000 (of which only $1000 came from the seller and both agents pitched in the other $1000).
3) If it was a purchase money loan and no equity line, why did they want any money from the seller at all? In AZ we have an anti-deficiency law that says they can't come after the seller.
In this case all parties wanted to be done, so we did what we needed to do to close the sale, but in all honesty, I don't think the bank acted in line with standard protocol. Ha- I guess, I shouldn't have expected them to anyway. All banks act by their own laws and contracts anyway. I was just hoping the art of negotiation would be standard practice. Nobody throws in a wild card like that after it has been agreed upon. Not Cool!
From what my negotiator said, he is starting to see a lot of banks require the seller to contribute so I just wanted to let all short sale sellers and agents know to be aware that this might come up in the process.
Good Luck out there! It is a rough market that we seem to be maneuvering quite well by changing and adapting along the way.
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