Homeowners who are behind on their mortgage payments can avoid losing their home if they act swiftly to negotiate a short sale before the lender files a public notice of foreclosure. A short sale costs the homeowner nothing—as long as they work with the right realtor.
Some less scrupulous realtors will ask to be paid up front for a short sale. This can be considered fraud. The homeowner does not have to pay a penny for the short sale process; in fact, the lender will pay the commissions. The bank would much prefer to negotiate a short sale over foreclosing on the house to minimize its losses. The lender is willing to pay a realtor to do the short sale to recoup as much of the outstanding loan as possible.
Regardless of whether you owe back property taxes or have liens on the house, the cost to do a short sale should be zero. Nada. Zip.
That said, as a homeowner, you still might incur some expenses to sell your home and bring your financial house in order. For example, if you have an IRS lien on your house, you have to pay an appraisal fee on the house (generally $200 – $400) to allow the lien to be lifted so your house can be put up for a short sale. (You are still responsible for the lien, but it is no longer tied to the house.) The appraisal fee is payable to the appraisal company, not the realtor. Similarly, if you are filing bankruptcy, you will to have to pay an attorney to complete the bankruptcy filing. However, all other fees for the short sale, such as realtor fees, closing costs, second liens, and HOA liens, are covered by proceeds of the sale, with your lender taking a loss.
If a realtor asks for advance payment or mentions fees related to a short sale, walk away. As a prediction, politicians looking to gain the confidence of their constituents in anticipation of the 2012 elections likely will start cracking down on fraud related to short sales. In the meantime, if you are considering a short sale, look for a realtor that specializes in short sales with a long track record of success. As the Dallas short sale experts, we are happy to assist you.