Would Bank Ever Agree to Pay 4% for Buyer's Closing Costs, VA Compromise Sale

I have a VA Compromise Short Sale listing and received an offer 2 months ago, but that buyer grew tired of waiting and walked. However, I did get a VA appraisal and Notice of Value, so I now have a great list price to work with because I know the minimum VA must net.

A new offer was tentatively presented via email: buyer's agent has a VA buyer who needs 4% in closing costs, and he also wants to roll $6,000 into the purchase to pay off his credit card and a $400 home warranty. If this was a regular sale, I would say write it up but it's been my experience that a bank will only agree to a maximum of 3%.

Several questions: do you think the seller's lender Freedom Mortgage will allow 4% in closing costs since it is a VA loan and 2, would the $6,000 be added to the purchase price or is that worked out between the buyer and lender.

Thanks for your replies...

Frank

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Permalink Reply by Bryant Tutas on December 11, 2011 at 7:54am

Frank. I've had lenders agree to as much as 6%. But I wouldn't count on it. I would also look for a better buyer. If there are no other buyers and the property has been fully marketed and on the market for several months then give it a shot. Just be able to show the lender that this is the "highest and best" offer.

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Permalink Reply by Kimberley Kelly on December 11, 2011 at 8:46am

I'm with Bryant here..better buyer would be best.

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Permalink Reply by Eric Mieles on December 11, 2011 at 9:00am

Same with me, buyer seems to "need" to much and if countered his chances of walking seem high. However as Bryan said depending on time on market, few buyers etc you may decide to go with it.

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Permalink Reply by Jim Stewart on December 11, 2011 at 10:02am

All sounds dicey at best to me. Waaaaaaay too many exceptions being asked for here. I'd say move on.

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Permalink Reply by Kevin - Greenville, SC on December 11, 2011 at 11:04am

Has the VA Liquidation Appraisal been done? Would the Lender still be netting a good deal more than 88.13% net of that?

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Permalink Reply by Frank Biganski on December 12, 2011 at 7:48am

Thanks a lot for all of your replies folks! Helps a lot in helping my client make an informed decision.

Kevin, the value has been completed and no, the bank will not net a lot more than the 88% - just break even. I see where this type of offer will lead to - just months off the property being off the market.

It's still early in the listing at this new reduced price and since the intension is to get the property sold, I think it's in my client's best interest to pass on this offer.

Thanks again! This site is a great resource!

Frank

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Permalink Reply by michelle Meyers on December 12, 2011 at 2:56pm

I have just gotten 6.5% closing costs approved for a sale. Listing agent suggested I revise my offer as they do not pay closing. I suggested they submit it and I will discuss the banks' response when we get it. My client was FHA and was adamant about getting her full closing - got it and the home warranty too...my thought is that some listing agents are "assuming" or trying to keep their offers simple....

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Permalink Reply by Tonia Vickery on December 12, 2011 at 5:26pm

You could always ask, however, I would have an addendum signed UP FRONT between buyer and seller, that if seller's creditor refuses to pay more than 3% then buyer agrees to proceed w/ the transaction. This way if it is declined you still have a buyer willing to go forward and didn't waste your time. Some times buyers just want to "try" but will still take the home regardless.