THE CONTRACT SAYS SELLER TO PAY FOR CLOSING COSTS –I’m a seller in hardship and don’t have money to pay those costs. Am I really expected to pay them?

THE CONTRACT SAYS SELLER TO PAY FOR CLOSING COSTS –I’m a seller in hardship and don’t have money to pay those costs. Am I really expected to pay them? 
(Explanation of who pays what in a short sale)

SINCE THE CONTRACT IS BETWEEN THE BUYER AND SELLER (ONLY SUBJECT TO THE BANKS APPROVAL OF TERMS) THE OFFER ON THE PROPERTY WOULD READ $100,000 SELLER TO CONTRIBUTRE $3,000 TOWARD THE BUYERS CLOSING COSTS. THE SELLER IS NOT REALLY PAING THE COSTS AS THE COSTS ARE BEING ABSORBEED IN THE BANKS LOSS.

FOR EXAMPLE- let’s say you are selling your home and you owe $100,000 and its worth $200,000, lets further say you have an offer for $200,000 and the buyer wants their $6,000 closing costs paid. Your costs as a seller are $16,000 for commissions, property tax and title insurance as well as the normal costs associated. You would be getting a check for $78,000 when the home sold. NOW let’s say the same seller is selling they owe the same amount and the costs are the same. BUT the home is now only worth $102,000 and offer is on the table for $100,000. Let's say the bank accepts the $100,000 offer. The bank cannot get their entire $100,000 payoff because the home is not worth more than the mortgage note and cost to sell. So the bank accepts $100,000 the costs to sell. At the lower price the costs are not $16,000 & $6,000 anymore. They are now $8,000 & $3,000. So the seller gets $0 and the bank gets $86,000 a $14,000 loss to the investor on the loan.

Since the contract is just between BUYER & SELLER the costs associated with the contract and the closing as well as any terms in the contract are listed as between buyer and seller. Therefor a buyer placing an offer for $200,000 and asking for closing costs assistance in the amount of $6,000 would ask for it paid by the seller not the bank. Though the bank will be the one paying it through their loss.

The bank does not sign the contract or sign closing documents, just the buyer and seller. Their written approval letter is their approval. ANY terms the bank does not approve that agency moves forward with will NOT be allowed at closing and will end up being the cost of buyer or seller. SO make sure your agent knows what they are doing!

Under RESPA laws in the state of UT a seller is required now to bring proof of final payment on utilities and HOA costs. MOST banks won’t pay utilities for the seller and SOME won’t pay HOA. If they do pay the HOA they may not pay late or legal fees. The buyer may be uncooperative in bringing these current. A seller needs to try to keep these paid and operating during the process, if they can’t thy need to tell their agent so that disclosure and property care can be established.