You will not be responsible for any seller concessions. These are all decided and/or worked into the calculation of the net loss the bank is willing to accept.
Whether seller concessions are allowed depend completely on the individual bank and their policy. A few guidlelines to set you up for success however are these:
Bank of America will ONLY allow seller concessions on FHA loans. If the buyer has conventional financing they absolutely will not allow it. Often times they will only allow the concessions on an FHA buyer if the offer price is at their appraised value as well.
Different banks have their own policies. I worked a short sale a few years ago and at that time Wells Fargo only allowed 1% in closing help and that was it. That may have changed by this time, but my point is that throughout the different short sales I’ve worked with different banks, there has never been one consistent policy actually made known (with the exception of B of A). I have also worked with banks that allowed the price to be increased to get the closing costs that they were disallowing and others that when they said no, that was it, period, end of story.
As a listing agent I make sure that any buyer writing on my listing has the ability and willingness to go to closing even if the seller help is reduced or denied. I don’t mind giving it a shot, but if it doesn’t fly, I don’t want all that time and effort wasted.
As a buyer, you should make sure that the property is one that you really love and make sure that it is worth it to you even if you can’t get the closing help. One would make the assumption that if you were going with conventional financing that you did have options. A short sale always requires flexibility and that includes changes such as this.
Too many people are feeling quite a squeeze on their finances with job loss or pay reductions, divorce and other factors that affect their income. Some of the worst things I see are people attempting to do the right thing, who subsequently deplete their savings accounts and 401k Plans to pay their mortgage, max out their credit cards with normal expenses like groceries and gas, all to avoid losing their home - only to come to that result in the end anyway and now with nothing left behind them.
Great deals and beautiful homes!
Absolutely. And this applies to foreclosure properties as well as short sales. Short sales are sold as-is because the current homeowner is in a distressed situation. Often, if not always, a financially distessed situation. So giving them a “to do list” from you home inspection is simply not feasible. The house is also priced more aggresively to help overcome this issue. The same with a foreclosed property.
So you can do your home inspection and although you cannot give the seller a list of items to fix or repair, you do have a solid idea of what you’re getting in to and can make an informed decision of whether to get out of the contract or stay put.
There are two lines of thought on WHEN to do the inspection. Some buyers or their agents prefer to wait until after the third party approval is received. They don’t want to spend the $300 = $400 dollars without the assurance of having the approval. I personally disagree with this strategy and insist on our listings that the inspection be done within 10 days of our accepting the contract. We the sellers are fully engaged and bonded to the offer and enbark on quite a work level to get the approval. I believe that the buyer should also have some skin in the game and be financially bonded to this process as well.
The reason I’ve just mentioned is self explanatory. Now let me shed some light on my line of thought. As a listing agent it’s pretty clear. I want all the obstacles out of the way in the beginning. If there is something so wrong that the buyer does not want to purchase the house, I want to know that immediately. NOT after I have all the blood, sweat and tears of 60 - 90 days of hard work or even more at times. Even for my buyers I sugget that they do it immediately. You are going to do an inspection at some point, why not now? If it’s going to stop you from buying the house, why keep youself stuck in this process either? Decide whether it will work or not and if not, move on to the next property.
(Source: thefoxteamshortsales .xom)
They may have been at one time, but now they lead the short sale banks by far!! They were one if the not THE first bank to use an online short sale system. The only exception to this is if you have an FHA loan, they still need to be done the old manual way and will take significantly longer.
The online system is called Equator. All documents are uploaded as PDF’s, and each step is assigned as a task. This resolves a giant issue of faxes not going through or getting lost in a sea of paper in a mailroom somewhere in Bank of America hell. The simple fact that you can submit something and know it was received is HUGE in this process.
With the Equator system you actually know who your negotiator is right away AND have their direct contact info. What a remarkable concept! And of course it works!
Tasks are clearly assigned…an email is sent alerting you to the task….and the deadline for completing that task is also clearly displayed. I have found that not only am I the agent, and therefore my client (through me) have accountability to repsond in a specified period of time, the same thing is happening on the other side. My negotiator also has timelines that they need to work with. All this keeps the file moving steadily through the process.
As a general rule I can count on a Bank of America Equator short sale getting approved in about 60 days maximum. Often I am actually settling in around 60 days.