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If you have been looking for a home over the last year or so you have encountered homes offered for sale with a “short sale” contingency.   There’s no avoiding them, they make up so much of a percentage of the homes for sale now in Macomb County as well as the entire state of Michigan.

As a buyers agent I discuss with my clients the pros and cons of making an offer to purchase on a home that is subject to a short sale.  We go over the time line that is normal, the process the seller has to go through in order to obtain an approval, and the pitfalls that can happen during the purchase process.

One area that keeps cropping up and can be confusing is this: Will the mortgage holder agree to paying for some (if not all) of the buyers closing costs?

The answer: It depends.    It depends on the mortgage holder, the type of mortgage the seller has, and the other various investors who have a say in the process (the PMI company, the end investor – Fannie Mae or Freddie Mac, etc.)

One common scenario is in which the seller has an FHA mortgage and the prospective buyer is also using an FHA mortgage for their financing.  In the short sale scenario FHA does not allow the seller to give more than 1% of the purchase price in sellers concessions to the buyer, even though FHA allows up to 6% of the purchase price to be paid by the sellers in a non-short sale purchase.

Please talk to your lender and your buyers agent before making an offer on a short sale purchase.  The type of financing you are using, as well as the type of mortgage the seller currently has can make a big difference in what is allowed & disallowed as far as the sellers helping you with your closing costs.

~Kris Wales~  A partner for your real estate needs in Macomb County MI
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