If my realtor says it is illegal for a purchaser to offer relocation expenses to a seller in a short sale, is that true?

Many lenders offer cash incentives for short sales, so why can’t the purchaser?

Asked on January 24, 2013 under Real Estate Law, Virginia


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

If your loan to purchase the property that you are buying on a short sale is a federally insured loan, the payment to the seller for relocation could very well be a violation of federal RESPA procedures in the such a payment is not necessary for the closing of the transaction. Your realtor is correct. The cash incentives for relocation on a short sale is seemingly improper to be paid to the sellers.

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