When you sell a home, the seller is responsible for paying the Realtor’s commission, seller’s title fees, title insurance and other closing costs that may apply. When a home is sold as a short sale, these same fees still apply, but the difference is the seller now becomes the bank and not the homeowner.
The bank will pay all these fees at closing, and it won’t cost the homeowner anything to do a short sale. In fact, if you qualify, the bank will actually pay the homeowner $3,000 to do a short sale through the Home Affordable Foreclosure Alternatives program, or HAFA program. I should clarify that a little more. I do not charge the homeowner to do a short sale, and most Realtors don’t. However, there are always those few who turn someone else’s hardship into their gain.
Beware Of Anyone Who Charges An Up Front Fee To Do A Short Sale
I am hearing that more and more homeowners are meeting with Realtors or companies offering to negotiate their short sales, but they are asking distressed homeowners to pay them a one-time up front fee. This fee can vary anywhere from a few hundred to several thousand dollars. One particular Realtor team I have been hearing about the most is charging their clients $1,700. It may be presented as a processing fee, administration fee, or other type of fee, but the bottom line is it shouldn’t cost you anything to do a short sale.
The Realtor commission is paid at the close of escrow by the bank. So, why do some Realtors charge a fee? Maybe they don’t have a very high success rate, and, therefore, won’t get the commission on the short sales they don’t close. At least charging a fee up front guarantees they get paid anyway.
Some Realtors may charge a fee because they use a third party to do all the paperwork and work directly with the bank. If that’s the case, and they are hiring someone else to do their work, then the Realtor should pay the costs of this service out of their commission, not the homeowner. Whatever the reason, I wouldn’t trust anyone who is going to charge you a fee to do a short sale.
I cannot even imagine going to a homeowner, who is in danger of losing his home because of a financial situation, and asking him to pay me to help him.
Are there any costs the homeowner will have to pay?
If the homeowner has an attorney consultation, or any other professional consultation where a fee is charged, the homeowner would pay this fee. The homeowner will be asked to continue to pay normal expenses, such as HOA fees. Apart from that, however, there should not be any cost to do a short sale.
For more information on short sales, or for a free confidential consultation, contact me directly, or visit my Web site at www.ArizonaShortSaleToday.com.