How Sellers Can Get Money at Closing in a Short Sale

When most homeowners hear the word *short sale*, they picture walking away from their home with nothing but relief that the foreclosure process has been avoided. And while avoiding foreclosure is a huge win on its own, many sellers don’t realize that it’s also possible to receive money at closing in a short sale.

Yes, you read that right. Sellers can—and often do—receive relocation assistance or incentive payments at the end of a successful short sale. Let’s break down how it works, why banks offer it, and how you can maximize your chances of getting funds to help with your move.

Why Would a Bank Pay You in a Short Sale?

At first glance, it doesn’t seem to make sense. If the lender is already taking a loss by accepting less than what’s owed, why would they also pay the homeowner?

The answer is simple: foreclosures are more expensive.

Banks know that if a property goes into foreclosure, they’ll spend months (sometimes years) tied up in legal fees, property upkeep, marketing, and resale costs. Offering a seller a few thousand dollars at closing is often the cheaper, faster option. It helps the homeowner move out smoothly and keeps the property in better condition, which benefits the lender in the long run.

Relocation Assistance Programs

There are formal programs that provide standardized relocation payments for short sales:

- **HAFA (Home Affordable Foreclosure Alternatives)** – Although the HAFA program has officially ended, it set the stage for relocation incentives. Many lenders still mirror this framework.

- **Fannie Mae & Freddie Mac Short Sales** – These government-backed loans may allow sellers up to **$3,000 in relocation assistance** if they meet eligibility requirements.

- **Private Lender Programs** – Some banks and mortgage servicers have their own “cash for keys” or relocation assistance programs. These vary but often range from **$1,500 to $10,000**.

Negotiated Incentives

Even when a relocation program isn’t formally in place, skilled short sale negotiators can often request or negotiate an incentive. This is especially true if:

- The seller has a financial hardship that makes moving difficult.

- The property is occupied and being maintained (which saves the bank money).

- The lender is eager to avoid delays or foreclosure expenses.

In these cases, the negotiator may push for a cash incentive at closing—sometimes as high as $5,000–$10,000.

What About Second Mortgages or HOA Liens?

In many cases, second lienholders or HOAs will demand some portion of payment in exchange for releasing their interest in the property. What sellers don’t always realize is that those payments can sometimes be structured as an incentive to the seller.

For example, a second lienholder might accept a payoff from the first mortgage lender and agree to credit the seller a small relocation stipend at closing. The key here is creativity and persistence during negotiation.

How to Maximize Your Chances of Getting Paid

If you’re a homeowner considering a short sale, here are a few tips to put yourself in the best position:

1. **Work with a Specialist** – Many agents don’t realize incentive money is even possible. Having an experienced short sale processor who knows the right questions to ask can make all the difference.

2. **Disclose Your Hardship Clearly** – The more the lender understands your financial challenges, the more willing they may be to approve relocation funds.

3. **Keep the Property in Good Shape** – Lenders prefer cooperative sellers. Homes that are occupied, maintained, and market-ready are more likely to get relocation assistance approved.

4. **Don’t Be Afraid to Ask** – Incentives are rarely automatic. You (or your negotiator) need to request them directly.

The Bottom Line

A short sale isn’t just about escaping a foreclosure—it can also provide a financial boost to help you move forward. While not every short sale results in relocation assistance, many do, and the amounts can be significant.

With the right guidance, sellers can walk away from closing with their debt resolved, foreclosure avoided, and a check in hand to help cover their moving expenses.

At Crisp Short Sales, we make sure every seller gets the best possible outcome—including exploring all available incentive programs and negotiation strategies to put money back in your pocket.

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