We get this question a lot still, so I thought I would address it again in another blog post and get it back up to the top of the post entries. The question is,
Will a short sale cost me anything?
We all know that in order to sell your house, you need an agent to list it (real estate agent commission) and there are seller closing costs that need to be paid. How do you pay for these items if you’re upside down on your house and you don’t have a lot of cash? Simply stated, none of these items come out of your pocket.
Let me give you a simple example, let’s just say (using simple numbers) your bank allows a short sale on your home that you owe $140,000. The bank says they are willing to accept a purchase price of $100,000. Now, let’s say the commission is $6,000, (could be more, could be less, just for example) your portion of the closing costs are $500, and the buyer needs $2000 to cover some of his closing costs…
What this means is that the lender is really willing to accept a NET of $91,500.
They are accepting the purchase price of $100,000, but the costs associated with the short sale are also coming out of their bottom line.
$100,000
-$6,000
-$2,000
-$500
= $91,500
So, none of this money comes out of your pocket, even though on the closing sheet is shows as being paid by the seller. Your lender is really just accepting less of a total net amount.
I hope this helps clear up some questions a lot of people have. If you have other questions, just call us.
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Good info guys. I use to think I had to pay the short sale agent. I did a short sale last summer and came back to your site to see how I need to report it to the IRS. Thanks for the web site.