Top Question Asked When Buying A Short Sale, Who Pays For Closing Costs?

Buyers and sellers want to know who pays the closing costs in a short sale? As a buyer you want to ask your agent this question before you write an offer. The best time to ask it is during your first meeting. In a short sale all terms, conditions and closing costs are subject to lender approval. Sounds pretty vague, right?
Let me tell you what closing costs you should ask for when writing a contract. Then I will tell you what they actually pay.

Buyer should ask the Seller to pay:

  • Sellers escrow fees
  • Sellers title insurance
  • Property taxes-including any back taxes
  • County taxes
  • City Required Reports
  • Retrofitting
  • Natural Hazard Disclosure
  • Termite Report & Repairs
  • Home Warranty
  • HOA transfer fee
  • HOA documents
  • HOA back dues if any

Here is what the seller’s lender typically approves to pay:

  • Sellers escrow fees
  • Sellers title insurance
  • Property taxes-including any back taxes
  • County taxes
  • Natural Hazard Disclosure (Sometimes)
  • Termite Report & Repairs (Credits)
  • HOA back dues if any (Sometimes)

Each lender is different and has their own policies on what they are approved to pay. That’s why it’s a good idea to ask for these closing costs to be paid. Keep in mind that short sales are a great opportunity to get a discount on a property. Chances are some of the closing costs will not be paid. So be prepared when you receive the lender approval for your offer, all the fees might not be covered by the Seller and their lender.
For more information on selling or buying short sales, contact Kristine with Prudential CA Realty, Santa Monica -Short Sale Specialist,  310-737-8173.

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