I closed a short sale deal with buyer number 2 for that property. The first offer comes in with a buyer asking for $3200 in closing cost. The buyer is doing a USDA loan and does not have the cash to pay closing cost. The buyer has a letter from a lender stating that credit has been pulled all documentation is in and buyer is approved. Buyer just needs a contract to get the ball rolling.
The short sale offer is submitted to Nationwide. I have a great seller he and I double teem them. Each of us call or email everyday checking on progress. The send someone out quickly to look at the house. I get a call from Nationwide telling me that yes the offer is high enough for them to accept as a matter of fact they can take much less. The only problem is that they do not allow seller paid closing cost on a short sale unless it is a FHA loan then they will allow only 1%. I try and work with the selling agent but try as we may his buyer does not have cash for closing cost.
Offer number two comes in $20,000 less than offer number one. Offer two is cash and not asking for closing cost. Even though offer two is $16,800 net less to Nationwide it is approved and closed.
Can anyone tell me one good reason for a bank to not allow seller paid closing cost on a short sale? That rule takes out most first time home buyers as possible buyers for the home and limits it to investors who can pay cash or at least do not need money for closing cost.
I admit I am no genus, but I would like to think that I am smart enough to figure out that they made a bad decision when the policy was adopted that no seller paid closing cost are allowed on one of their short sales.
Not only did they toss $16,800 out the window on this deal just think of the appraisal issues this sale will cost other sellers. It is a shame that the sales price will be used as a comp. It should have, could have and would have closed for $20,000 more.