Will I get any money if I sell my house as a short sale?

Will I get any money if I sell my house as a short sale?


Not Usually…

In the majority of short sales, the seller receives no money.  In some cases, the seller is expected to contribute some money at settlement.  The lender’s attitude is that if they’re losing tens of thousands of dollars, then they certainly do not want the seller to receive any money.

 But Sometimes…

There are situations where the seller can receive some money even though it is a short sale. FHA/HUD short sales pay $750 to $1,000 as a seller incentive.  The federal government’s Home Affordable Foreclosure Alternatives (HAFA) program pays $3,000 to the occupant of a property at the time of sale or upon post-settlement move-out.  Under the HAFA program, the $3,000 could actually go to a tenant.

 JP Morgan program

In 2011, J.P. Morgan Chase and Bank of America rolled out pilot programs known as cooperative short sales.  Under the Chase Foreclosure Outreach, Chase offers selected borrowers who are in default up to $25,000 as an incentive to sell.  The loan must be owned by Chase and not merely serviced by them.  We have seen actual letters sent from Chase offering $3,000, $10,000, $15,000, and $25,000.  Chase tells the borrower they will receive the money if they list with a licensed agent and the contract generated by the agent is acceptable to Chase.  The borrower is not expected to submit any financial paperwork.  In the traditional short sales, the seller constantly submits paperwork displaying their finances.

 Bank of America program

Bank of America’s cooperative short sale program offers up to $30,000 to selected borrowers who are in default.  We saw one letter where the borrower was told they would receive $23,765.49 upon the sale of their property.  The borrower is likewise not expected to submit financial paperwork.  In the Bank of America program, the seller and listing agent are told what the list price must be.

 Final Thoughts

It should be noted that the majority of people who sell their property via a short sale will not receive any money.  We recommend that sellers save up at least several hundred dollars in preparation for the settlement.  Sometimes the seller will be asked to contribute some money to cover unanticipated closing costs that the bank will not pay.

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