Short Sale Musical Closing Costs

I am a broker listing a house for the personal representative of the estate of a deceased veteren. This will be a short sale.

Talked with the servicer (Midland) and they won’t pay the $1,500 for a trash out and a clean up. We need to go to market and this would help us get the highest and best offers – the estate has no money what so ever. The pr is willing to do this only so things can be settled – she will get nothing for doing this.

The bank said they absolutly would not cover this even if it’s part of the HUD (closing statement). I’m frustrated – I’m trying to get them the most money and they won’t even agree to this basic need. Any ideas appreciated. 

It’s VA insured but doesn’t the bank only get about $60,000 entitlement from the VA?

Fred

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Hello Fred,

The Dept of VA approves short sales (or what the VA refers to as a ‘compromise sale’) at 88% net of the appraised value.  The VA will permit closing costs that are “reasonable and customary” to be included. 

First, submit the compromise sale to the VA and have them approve it with the property prior to the cleanup and include 3% for the seller to pay of buyer’s settlement costs (this will come out of the shorting lender’s net since the net-to-seller is zero). Then, complete the trash out and at closing list the trash out as a buyer cost.

As an aside, this is why it is important to negotiate in advance of an end buyer.

Thanks for the questions and hope this helps.

Paul