An agent emailed yesterday to ask why a particular bank made an adjustment to the fees in its short sale approval letter. He reiterated what a good, good agent he had been. Why, he had done everything expected of him. He had sent a promise to not write any other offers, he had his buyer deposit funds into escrow -- he complied with each and every stipulation. Not to mention, he had waited all of some 33 days for approval -- which must have been like sheer torture to him. Why was he being punished now? Why was the bank doing this?
He did not want to hear that the "why" was unimportant. The fact that we have short sale approval is what is important. We can't change the "why" even if we knew why the "why." Buddy, it just doesn't matter. Tie your shoes so you don't trip flat on your face and get on with your journey.
Fact is there are often fees a short sale bank won't pay. Not only that, but the bank might not let the seller pay them, either. It's the way short sales work. End of story. Sometimes, the buyer comes to the table with additional closing costs that the buyer did not expect to pay. It's generally not a big deal if the bank is giving the buyer a 3% seller concession, because those fees can be rolled into that 3% credit. Just make sure the buyer's lender knows about it so the Good Faith Estimate can be fixed. You don't want to deal with this at closing. It could cause delays and delays can blow up a short sale.
Some investor guidelines such as those found in certain Bank of America short sales, for example, disallow payment of common fees such as doc preparation, notary, overnight and recording. In Sacramento, those fees add up to about $400. These are fees that typically cannot be waived. Moreover, sometimes the bank won't approve the escrow fee, even though it's customary for the seller to pay 100% of the escrow fee in Sacramento.
I felt empathy for buyers of a different Sacramento short sale that was approved last week. I shouldn't have felt sorry because it was their own fault -- they just didn't offer enough, regardless of what I suggested. Since there wasn't enough money in the transaction to meet minimum net guidelines, the bank cut the fees on the HUD. The seller's concession toward closing costs was greatly reduced. I drew an addendum reflecting those changes and the buyer and seller signed it.
However, I held back on the escrow fee to question it. Nope, the bank flatly refused. The bank cut that fee from, say, $1,500 to $500. That meant the buyer needed to absorb the difference. In an effort to soften the blow, I drew an addendum that said the fee would be reflected on the buyer's side of the closing statement and on the buyer's Good Faith Estimate. That sounded nicer than to blurt out, "Buyer pays $1,000 escrow fee." Words have impact, you know. When I asked the buyer's agent why I don't have the addendum back, the response was, "Because we don't who is paying the $1,000."