WHY WON'T THE BANK PAY MY CLOSING COSTS FOR A SHORT SALE?
This is an important issue to cover with buyers considering purchasing a short sale home. The point of WHY WON'T THE BANK PAY MY CLOSING COSTS FOR A SHORT SALE? is some lenders just have a policy against paying ANY buyer closing costs. That can kill some deals.
The only solution (usually) is to ask the buyer's lender to finance the closing costs. Although some agents may choose to give some credit for them, too.
Either way, it's important to come up with a Plan B before it's needed.
WHY WON'T THE BANK PAY MY CLOSING COSTS FOR A SHORT SALE?
When you write an offer on a short sale, the bank is losing thousands and sometimes hundreds of thousands of dollars. The only thing the bank cares about is their net - how much money they are receiving after all the costs are deducted from the sale. Very often, this doesn't include any room for paying closing costs.
Astute buyers and their agents will offer to increase the offer to pay closing costs, but the bank sees this as more money they could put in their pockets to help cover their loss. They only want to pay the traditional Seller closing costs and any lender-required costs that the Buyer can't pay for with certain loans, such as VA and FHA.
Bank Policies
Some banks have a policy that they will not pay buyer closing costs no matter what. Even if the buyer is willing to add it to their net. Even if the house will appraise. They just don't want to do it.
Why did the bank pay my friend's closing costs?
Some banks don't have a policy against paying buyer closing costs and sometimes the loss isn't so great, so the bank is willing to pay some buyer closing costs as long as the net works out for them. Also, be sure your friend was buying a short sale, not a foreclosure. Banks are much more willing to pay closing costs for a foreclosure.
Some surprises aren't fun.
There was a contract on a short sale and the offer was submitted with a closing costs request. The buyers waited almost 90 days for the answer from the bank. After waiting three months, they were told the bank wouldn't pay closing costs. That was not a fun surprise. Fortunately, the lender could roll the closing costs into their loan for an increased interest rate. But what if that were not possible?
If you can gamble on closing costs, then go ahead and ask. But don't be surprised and have a Plan B in case the banks says No.
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