BofA Approval Letter - How to interpret it??? Closing costs vs commissions.

Hi,

We are the buyers and received a short sale approval from BofA! They have moved along super fast.

property in southern CA.

* 30 days, received the counter offer from BofA. They would not pay seller's $750 escrow fee. Fine.

*10 days later, we received the approval letter. Awesome.

In our original offer, we did not ask for a closing cost credit.

The bofa approval letter states

$500k purchase price

Sect 4a) Closing costs to not exceed $25,000

Sect 4b) Max commission paid $20,000

My question is, where does the $5,000 difference go? BofA would not pay any sellers fees and would not pay for the termite inspection. no warranty too per the original offer and counter offer. Fine, I hear that's normal.

Will that $5,000 be applied to us as the Buyers? I know it's wishful thinking...but want to ask.

Also at this time(after the approval has been issued and the RPA signed), can we still negotiate with the bank and ask for a closing cost credit? How is this done? What are the risks? Can the bank change their purchase price, etc? I know these questions are for our agent, but I want to get some other opinions.

Thanks for the input!

-joe

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Permalink Reply by Sara Mehrpouyan Los Angeles CDPE on August 11, 2011 at 2:13am

Joe, closing costs should refer to the seller's closing costs - excluding the commissions. Commission is separate at $20,000. So, the way they have it written- it's $45,000 max. Good luck.

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Permalink Reply by Jeff Payne on August 11, 2011 at 9:08am

The closing costs include the commission, the commission is only stated separately so that there is a cap on the commission. Outside of commission there is title insurance, closing fees, tax prorations, HOA fees, transfer fees, etc.

I don't believe that there is $5000 left over.

Sara, Pull out one of your BAC approval letters and do the math, they include the commission into the closing costs on their approval letters

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Permalink Reply by Sara Mehrpouyan Los Angeles CDPE on August 11, 2011 at 1:12pm

Jeff, i meant that same thing that you have stated-- the commission is listed separately. Thanks.

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Permalink Reply by Bryant Tutas on August 14, 2011 at 8:20am

In the newsletter today

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Permalink Reply by Maria L Ramos/Broker on August 14, 2011 at 11:17am

It looks like the $750 was countered out but the closing cost should not be and you should be able to get some for closing cost. You need to look at the settlement statement HUD1 that was used to negotiate the approval of this short sale. Ask your escrow officer to give you the last settlement state. Also your agent should have also and there you will see where the amount are going towards.

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Permalink Reply by Kimberley Kelly on August 14, 2011 at 1:41pm

Commission is DEFINATELY included in Net Seller closing costs. Go over the numbers..if there is ANYTHING left over, Buyer nor Seller will get it..Short Sales net goes to Lenders. Read the approval letter very carefully. Ask your Escrow person for help understanding the costs if you need to..

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Permalink Reply by Samantha Fenn on August 14, 2011 at 5:43pm

Hello... BAC policy is CCC for buyers only if they are VA/FHA so if this is conventional you would not receive them; Even if there are is a positive balance left over after allowable closing costs are paid, they will go back to the bank. Unusal for them not to pay for the 750 Settlement I have never had that happen; unless there was an attny fee listed on the HUD? then their policy is atttny fee or settlement. Check your HUD and see if there was an attny fee listed on the seller side. Good Luck and congrats on the quick approval.