seller wants $3000 cash to close .. isnt this illegal?

okay we are now 2 weeks from closing but the problems continue.

Seller is expecting to receive $3000 moving money even though they did not qualify for the HAFA program.  They were emailed about this months ago by the negotiator (i was copied on it).  They are stating they will not close without it.

isnt it illegal for me (the buyer) or the broker to agree to give them cash to close the deal?

what say you???

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I have completed a few short sales where the buyer and seller have written up a   BILL OF SALES for personal items.  Which can be used as seller incenitive or relocation.  That way it doesn't not have to be part of the HUD..It is a separate agreement between the buyer/seller for personal property...its like buying a car.  A Real Estate Attorney suggested this years ago to me.

YES! Bryant,Love and agree with your comment above with Cathy and Arod!

Buying the Seller's personal items is a great play, and interception. Field Goal! 

Debra Savittieri

Some states have short sale laws. Yes, I am aware that alot of banks are giving financial incentives on non-HAFA deals. But that's not what this particular question is about.

This is a non-HAFA short sale. Just from the poster's information, it seems that it has been long established that the seller is not entitled to any cash credits from the lender. But he/she is trying to extort the imaginary $3000 "moving money" from anyone involved in the transaction.

People do these kinds of things because somewhere along the line somebody tried it and it worked because some agent gave in. My opinion is that as professionals we need to learn how to just say no. The seller does not have the upper hand here. Entertaining his/her demands is a time waster. I would take a hard stand on this one.

Now if the seller's agent promised her/him moving money, that's their issue to deal with, they should take the hit, but as the buyer's agent, no way I'm opening my wallet or letting my buyer do it. And I stand by being offended that his agent would suggest doing things under the table - the poster's words.

Arod, yes it is. The seller cannot receive any money. However, this happens all the time. Whomever gives the seller 3k must do so off the HUD. Maybe have a private garage sale. Split this with the listing agent. My advice is to hire a moving truck so the seller has the mentality of leaving.

Bryant is correct, it isn't illegal but chances are the foreclosing lender will not allow any proceeds to the seller. I don't even think I ever read an approval letter which allowed it.

Satar, have you ever done an FHA short sale?  The seller gets relocation money.  HAFA sales get money at closing.  Chase has a program, BofA has a program that pays the seller to cooperate with the short sale.

I meant in instances in which the lender didn't give any incentives.

Arod, are you sure that the lender is not giving the seller an incentive?  It happens quite often, sellers get money from their lenders for cooperating in the short sale.  I have one with Chase right now that the seller is getting $13,000 cash at closing and it is a non HAFA deal.

Not  sure where everyone is getting the idea that it is illegal for a seller to get money from a short sale.  It is up to the lender/investor and it happens very often.

Check to see if the seller is being given this money by the lender. 

Jeff: thanks for the info. i did not know that sellers can get money outside of HAFA. 

where would it say it? on the bank acceptance letter? i looked it over and they are not getting anything.

It would be on the approval letter. If it was there, you wouldn't be having an issue for 3k.

I think everyone is missing the point.  1 - he has an approval that states the seller cannot receive any money 2) it goes further to state "without prior approval" 3) they've already agreed to terms.

So to me you have a decision to make.  Is this house worth the $3000?  The seller can SELL personal property however, I don't ever get into that in my sales.  I don't condone that in any way, but I know it happens.

I've had seller's try to extort buyer's before and it kinda stinks.  In January I had a very unstable seller try to to the same thing.  She thought she was going to SCREW the bank by not closing and not getting the $3000, but she didn't know they had set the property up for auction two weeks after expiration of the approval.  She wanted $$$ and the buyer said "NO" - and that he'd just wait for the auction and "get it cheaper" - when she heard those words, she closed.

It's really sad to see this, but some of the seller's just seem to lose it at the end and I'm sorry you're going through that.

Smitty. Arod's original posting didn't mention the verbiage in the approval letter. That's why i had initially asked him to look at that document. Since his specifically prohibits it without prior approval then that's what they need to do.

In my area we sell a lot of furnished vacation homes. It's quite common for the sellers to sell the furnishings to the buyer for 3-5k. this is done outside of closing because it has nothing to do with the short sale. The furnishings are personal property and were not paid for with the mortgage financing. These funds are usually used to pay for HOA fees, repairs or cash contributions.These are legit purchases at a fair value. The sale is also handled between the seller and the buyer.

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