The lender will usually pay for the following costs associated with the sale:
- Escrow fee (seller’s half)
- Owner’s title policy
- Recording fee’s
- Some will pay the reconveyance fee
- Some will pay the overnight mailing fee for the payoff
- Real estate property taxes and prorations to the buyer
- Real estate commissions (6% or below -- lender will set the amount)
- HOA dues and fee’s (some will not pay the disclosure fee)
If the HOA has placed a lien on the property, the lender will usually only allow $1,000 to be paid towards this lien. You will need to negotiate with the HOA to reduce their fee’s and accept this money as payment in full. Remind the HOA, that if this home goes to foreclosure and is sold at auction -- they will receive nothing! This is a good deal for them!
Lender will NOT pay for the following:
- any buyer costs or allow any seller contributions to be paid to the buyer for any reason (it does not matter how high you raise the sales price to compensate for this amount; they will gladly accept the higher sales price, but will require the contract to be amended to remove the seller contributions to the buyer; ultimately the buyer will simply pay more for the home)
- a home warranty
- the buyer’s appraisal
- the buyer’s inspection
- for any repairs; all contracts are to be purchased in “As-Is” condition; use an "As-Is Addendum" to the contract
NOTE: as of the middle of 2008, most of the above rules have changed. Lenders are now much more willing to negotiate any and all details regarding a short sale. The bottom line is: if you want the property and the bank wants to sell its ... make an offer and negotiate!
There is still quite a bit more to cover in additional posts.
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