Who Pays for a Short Sale? | Short Sale Lawyer

Today's question is, who pays for a short sale?

Well, that's a multi-faceted question, so we're going to cover all of the various expenses associated with a short sale transaction and who pays for them.

In a short sale, there are certain fees that the lender actually pays for. 

Those fees include settlement costs, excise tax, title and escrow fees, and real estate commissions. Now, all of these fees together reduce the overall net proceeds that the lender realizes from the real estate transaction, thus cutting into the lender's bottom line. In addition to those closing fees, the lender, in many cases, will also pay certain subordinate liens.

For example, if there's a second mortgage or if there's a home equity in line of credit, oftentimes, the lender in first position will allocate or authorize a contribution to go to these subordinate lien holders to get them to remove their lien from title, thus facilitating the real estate transaction. And these subordinate liens include HOAs, judgments from creditors, as well as second mortgages or home equity lines of credit. 

In some cases, when the lender flat out refuses to pay these subordinate lien holders, the other parties to the transaction will have to step up and contribute to pay off these subordinate lien holders.

Now, what about the short sale negotiation fees? 

Who pays the attorneys who are actually settling the debt and negotiating the short sale transaction. Rarely, if ever, does the lender actually pay for the short sale negotiation service. Typically, it's either the borrower or the buyer who pays the short sale negotiation fee. Most big law firms charge the borrowers or the homeowners the negotiation fee.

Here at Ark, we do things a little differently. 

We understand that the distressed homeowner, oftentimes, is not in a position financially to pay for expensive attorney fees. Instead, what we've done is we've shifted the burden of cost to the party that's in the best position to pay, and that's the party coming to the table with money, it's the buyer. And typically, the buyers are glad to pay our fee because they take comfort in knowing that a professional law group is negotiating the short sale, thus optimizing the chances of successfully obtaining approval from the lender and moving to closing.

Here at Ark, our negotiation service is a buyer-paid fee contingent upon closing. We don't get paid until the deal closes.

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