Your Short Sale & Commission, Who Pays?

In a standard real estate transaction –closing costs (including the sales commission) are deducted from the Seller’s equity in the home. Pretty straight forward. Looks a little like this, overly simplified:

$ 350,000 Home Sales Price

$ -150,000 Loan(s) on House

$ -21,000 Closing Costs

$ 179,000 Balance to Seller

However in the Short Sale transaction it becomes confusing to the average Seller. In fact we’re finding that the public in general does not have a clear understanding of what a short sale is, how it works, or let alone where the closing costs including commission comes from. It leads Sellers in financial distress to believe that they can’t afford a professional Realtor to sell their home because they don’t think they have a way to pay them. Wrong!

The short sale simply IS that- the Seller doesn’t have the equity, means, money, savings, etc. to pay anyone fully in the sale of their home. Empty pockets!

When we sign a listing agreement with you to sell your home and we know we are in a short sale situation- yes we do put in a commission rate but we also include a disclaimer that we understand that payment of the commission is contingent upon your bank coming to agreeable terms with you (Seller). This agreement includes them accepting less than what is owed on your mortgage(s) because you are upside down in your house including closing costs. In fact some Sellers just need help to cover the closing costs alone.

Here’s the simplified scenario:

$ 350,000 Home Sales Price

$ -375,000 Loan(s) on House (including back payments, penalties, etc.)

$ -21,000 Closing Costs

$ -46,000 Negative Balance (Short Fall) This is what we will have to negotiate with your bank to absorb in the sale of your home.

Obviously it is a little more complicated than that and everyone’s scenario is different. However the goal is always the same…to sell your home under mutually agreed upon terms by you and your bank.


One response to “Your Short Sale & Commission, Who Pays?

  1. Great article. I still talk to people who think they personally need to write a check to short sell their home.

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