It is very common for buyers to ask for sellers to pay some of their closing costs when buying property, and this is commonly accommodated by the sellers to move the transaction along. But what happens in a short sale where there are no proceeds to the seller?
There is a common misconception that closing costs assistance is not allowed in short sales – but the truth is most of the time seller concessions are in fact available a short sale situation…with some limitations.
The seller does not pay these funds to the buyer directly. They come out of the proceeds of the sale like most other seller closing costs in a short sale.
While some private investors have unpredictable guidelines, most lenders (generally those with VA, Fannie Mae or Freddie Mac backed loans) in a short sale will allow up to 3% seller concessions to be paid towards the buyers closing costs. FHA allows 1% – but only to buyers with FHA loans. Key as always – is in knowing who the investor on the loan is. An experienced short sale agent will always have this information available.
Last Updated on May 18, 2020 by Minna Reid