Can I Afford Your Services? How is my Agent Paid in an Orange County Short Sale?
In a typical equity sale, the seller signs an agreement to pay a commission to the listing agent, and the listing agent then shares this commission with the buyer’s agent.
When I meet with sellers who are considering a short sale, which occurs when they owe more on their home than it is worth, they are concerned that they will have to pay an agent commission. Most can’t afford to make their mortgage payments and do not know how they will pay a commission.
I explain to them that any offers they accept will be conditional upon their lender’s agreement to pay some or all of the closing costs that are typically paid by a seller as part of the short sale agreement.
Costs that May Be Paid by a Short Sale Seller’s Lender
- Agents’ commission
- Contribution to second mortgage
- Escrow fees
- Title insurance policy
- Seller contribution to buyers’ closing costs
- Termite repair
- Hazard disclosures
- Home warranty
- Seller moving costs
- Messenger fees
- Notary fees
- Past due real property taxes
- Past due home owner’s association dues
- County tax stamps
- Miscellaneous fees
Not all lenders will pay all of these costs on a short sale. Some will cut the costs entirely or pay some percentage of them.
Part of the negotiation with the lender will be what costs will be paid and what costs won’t be.
In general, most short sale lenders will agree to the following if they agree to a short sale:
- Agents’ commission (may be reduced)
- Contribution to second mortgage (often a few thousand dollars; sometimes more)
- Escrow fees
- Title insurance
- Hazard disclosures
- Messenger fees
- Notary fees
- Past due real property taxes
- Past due association dues (may pay a portion)
- County tax stamps
Different lenders have different requirements and different items they will agree to pay from the proceeds of the purchase price. What a lender will agree to on a short sale often depends upon who the final investor is as many lenders are actually servicing companies for the final investor.
In the realm of real estate, particularly in short sales, it’s essential to grasp that lenders’ stipulations can vary significantly. Moreover, these variations often hinge on the identity of the ultimate investor. Many lenders function as servicing entities for these investors, which means that their decisions regarding what expenses they’ll cover from the purchase proceeds can be influenced by these investors.
In addition to navigating these intricacies, optimizing your financial standing during a short sale involves another crucial aspect: comparing insurance options. Be it title insurance to protect property rights, homeowners insurance to secure your investment, or mortgage insurance for financing, the insurance landscape can vary widely. Seeking quotes from multiple insurance providers or comparing prices here https://utilitysavingexpert.com allows you to identify the most advantageous deals and tailored coverage to meet your specific requirements.
If you believe you need to do a short sale on your home, but are concerned about having to pay many of the typical fees, please contact me at 714.319.9751 to discuss your options.