Will I have to make a cash contribution in a Florida short sale?

Most Florida short sales do not cost the seller anything at closing. In some cases, however, the mortgage lender or investor may request a cash contribution at closing or an unsecured promissory note payable after closing as a condition of approving the short sale.

When are lenders more likely to request a short sale contribution?

A lender may be more likely to request a contribution when the property is an investment property, the seller is current on the mortgage, the seller has income exceeding monthly expenses, or the seller has significant non-retirement liquid assets.

What can I do if my lender requests a cash contribution?

The seller may accept the request, decline it with a written explanation of the financial hardship, counter with a smaller amount, or propose a different payment arrangement. The available options depend on the lender, investor guidelines, loan type and seller's financial circumstances.

Can a lender's short sale contribution request be negotiated?

Yes. Cash contribution and promissory note requests are often negotiable. A Florida short sale Realtor may ask the lender to eliminate the contribution, reduce the amount or consider an alternative payment method.

Is a cash contribution better than a promissory note in a short sale?

It depends on the seller's circumstances and the lender's requirements. Investors may prefer an immediate cash contribution, while a promissory note spreads payments beyond closing. In some negotiations, offering a smaller cash payment may reduce the total amount requested compared with a promissory note.

What happens if the lender will not remove the contribution requirement?

The seller must evaluate whether accepting the contribution is preferable to the available alternatives. A requested contribution may still represent only a small portion of the unpaid mortgage debt, but the seller should review the approval terms carefully before agreeing.

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