Buyers, ff you are making an offer on a Short Sale, please read this article carefully.
In a Short Sale, whether or not the buyer can receive assistance from the sellers with closing costs depends on these two things:
1) What type of loan the Seller currently has, and
2) What type of loan the buyer is obtaining to purchase the subject home.
a) If Sellers Currently Have FHA Loan On The Home
If the Seller currently has an FHA loan, the Buyer has to also obtain an FHA loan to purchase the property. According to the current Housing Urban Development’s guidelines is the seller can only contribute a maximum of 1% of the Buyer’s loan amount.
b) If The Sellers Currently Have a VA or Conventional Loan On The home.
If the Seller has a VA or Conventional loan, regardless of the type of loan that the Buyer is getting. However, most lenders will not approve assistance with Buyers closing costs in excess of 3% of the Sales Price. AND the Buyer must submit a fair-market-value offer.
The guidelines for FHA Short Sales are governed by HUD. In our Short Sale's experiences, we have never seen any exceptions to these guidelines. On the other hand, on VA and Conventional's Short Sales, the guidelines are a bit more flexible and will be lender-specific.
In conclusion, buyers, if you are considering making an offer on a Short Sale home, ask the seller what type of loan he/she has before you make an offer. It is even more imperative when buyers are obtaining FHA loan and are relying on the seller's assistance to pay for closing costs. Otherwise, everyone's time will be wasted.
