Home Sale Hindsight
Home Sale Hindsight
Q: Who pays for home cleanup costs prior to selling? We are purchasing a short sale and the bank approved our offer! Woohoo! But wait, there are some things the bank won't pay for. One of the items is home cleanup costs (taking out trash, old box springs, etc.) being charged by the sellers' Realtor (who is also a relative of theirs) that was done months before the house even went on the market.
So the sellers added an addendum to the purchase contract wanting us to pay for their share of closing costs because they have no money. I understand they have no money, but they signed the contract stating that they would pay for some things and I don't feel the cost to clean up the house to market it should be included in the closing costs. Is this legal? We feel exploited. --Terri S., Las Vegas
A: Often, in a short sale the answer to the question of "who pays" for a given line item is simple: whoever wants the deal to close the most! And when, as in the vast majority of short-sale situations, the seller doesn't even possess the funds to pay for an item, and the behemoth of a bank flat out refuses to, the question becomes whether the buyer is willing to pay the cost or would prefer to walk away from the deal and the home.
When the sellers submit a short-sale offer and application package to the bank, the bank always has the right to accept, reject or make a counteroffer, the latter of which is essentially what happened here. The bank countered the sellers' application, accepting the terms of your offer but refusing to cover all the requested closing costs. In effect, your offer has been countered at an additional $4,200, and you came up by $2,000.
The underlying wrinkle here is, because the fee is being charged by the sellers' agent, and not an outside third party, perhaps you feel the sellers' agent could reduce or waive the fees. (In fact, the bank might think so, too, which is why they refused to pay it -- it's probably the only closing costs the sellers requested the bank pay that is not necessarily an absolute impediment to closing.)
So, ask the listing agent to reduce or waive the cleanup fee. And, when your agent communicates your request to the listing agent, make sure your agent also communicates that the transaction may be in jeopardy over it. And if they refuse and the bank refuses to pay the difference, then the ball is back in your court to determine whether you're willing to lose this house over that $2,000.
Think of it this way: Would you be willing to pay an extra $2,000 for the place, if the bank had come back and simply said they wouldn't take the offer unless you came up that much? I'm not suggesting that you should, or shouldn't -- just that you think of it this way.
What's legal between two parties to a real estate transaction is largely based on what they agree to. This issue you're having is really a short-sale seller attempting to renegotiate the terms based on the bank's response to their short-sale application -- there's nothing illegal about that (although there is lots that's irritating about it!).
You have the legal option to either take it, work a resolution out, or leave it -- and any of those would be legal alternatives to their attempt to change the terms via this proposed addendum.
Ronald Gitter, a New York City real estate attorney who blogs at CoopAndCondo.com, has a rule that seems pretty appropriate here -- he says, "If it costs less than a 'flat-screen,' work it out." So, obviously, the $2,000 gap in your place would buy a pretty incredible flat-screen TV (or two), but the principle applies.
BofA has already provided an approval and terms, and it's pretty unlikely they'll change their minds. Be prepared in your own mind with the knowledge of whether the $2,000 is a deal-breaker for you, or whether you want the house enough (and are otherwise getting a good enough deal) to warrant coming up with the $2,000, despite the irritation factor.
Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.
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