Nobody likes to be backed into a corner. Which is why a buyer's agent in a short sale needs to verify whether the short sale approval letter matches the HUD. The HUD should match the purchase contract. If there are variances in the fees, guess who is likely to pay them? I'll give you a hint, it's not the seller.
In California, we have California Civil Code 580e which says, among other things, sellers can't be required to contribute to a short sale. A lender can't make a seller bring money to the table to close. This means all of the sellers' closing costs need to be paid from the proceeds of sale. There is no out-of-pocket expense. If there is it needs to be disclosed on the HUD and approved by the lender, and very few banks are approving a seller contribution. They don't want to violate the law, at least not openly.
To illustrate getting backed into a corner, the photo in my blog today is a picture of Pia at the vet yesterday. She had a small bump next to her ear. It was cancerous. She wasn't very happy about going to the vet. We had to trick her to get her into the carrier. And of course, she told the other two cats to run under the bed and stay there. She projects little kitty brain waves, and they all speak the same silent language.
As a buyer's agent, don't be silent. Speak up when you get the approval letter and ask if it matches the HUD. Ask if there are any fees the bank has not authorized the seller to pay.
Please note that if the bank has approved a credit toward the buyer's closing costs, it's kind of silly to demand that a buyer will not pay a fee on behalf of the seller. How are you going to say, hey, thanks for $6,000, but I'm not paying your $150 doc prep fee?
A buyer's agent won't know if all the fees were approved unless she asks or the listing agent volunteers the information. Not every Sacramento short sale agent understands how to do a short sale or the inner workings of a HUD. A buyer is not entitled to a copy of the seller's HUD. But a buyer is entitled to know if there are any fees that were not approved. Especially if the buyer is expected to pay.
Photo: Pia at the vet, Adam Weintraub
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