HOW DOES THE MONEY WORKS IN A SHORT SALE

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.