Oct 31, 2012
Tip 42-2012: Short Sales - Which Closing Costs Will The SS Lender Allow To Be Paid?
In "Short Sale World," not all of the Seller's closing costs will be allowed to be paid from the Sales proceeds. Remember, once Short Sale Lenders approve a short sale, they will also authorize what Seller closing costs are allowed to be paid.
Fortunately, most lenders allow the full 6% real estate commission, the Seller's grantor tax and most of the termite bill. All other closing costs are "fair game" as to whether or not they will be paid.
Certain closing costs like outstanding HOA dues, disclosure packets and extended warranties are normally never allowed (or only a limited amount is allowed). In some instances, if there are delinquent real estate taxes the lender may only allow the current taxes to be prorated. Also, if there are "closing cost credits" to the Purchaser, do not be surprised if the Short Sale Lender decides to limit the amount of the credit.
The main point of this tip is to warn all parties involved in the short sale not to be surprised with last minute changes. The parties should expect requests to participate in paying some of the closing costs that the Seller normally pays in a closing. Just remind everyone to be flexible, and the short sale will be successful!!
Contact me at 434-951-0858 or Tucker@TGBLaw.com if you have questions, or visit our blog below for previous tips.
Posted by William D. Tucker, III (Bill) at 2:44 PM