Your ability to negotiate will determine your success or failure in this business. Remember, there are 4 different negotiations you need to successfully do before you can collect a paycheck, and the one we’re going to talk about here is with the bank (or the loss mitigator). The first thing you need to understand is that the banks train their loss mitigators. Banks train their loss mitigators on many different negotiating techniques (some of which include lying… yes, lying). So how are you to counter that? You’re just trying to get a successful short sale deal negotiated at a fair price that can make you some money and save the homeowner from foreclosure and a deficiency! So how can you counter this? Here is how you do it. First off, do not negotiate over the phone. Try to do all your negotiating via fax. Now that being said, the reality of it all is that the negotiator is probably going to call you. Ok, so how do you handle that? Well, you need to have to front yourself as the “negotiator” on the deal. Do not tell them you’re the buyer. If they try to corner you (which they will), just tell them that you need to talk with the buyer and see if they will agree to the banks terms. That will give you some time to “think” about what is happening and what you want to do. Here’s an example. You’ve offered the bank $155,496 for a property. They do the BPO and counter you (verbally) at $194,000. What do you do? Get all the loss mitigator’s contact information (if you don’t already have it) and tell them you’ll pass on the information and fax them the counter offer. DO NOT NEGOTIATE OVER THE PHONE!!! Tell them that you do not have authority to do so, and that you’ll get back to them. Simple enough. When you DO send your counter offer, just come up $1000 or so. After this, then bank may drop their price significantly, or they may hold firm at their $194,000 price. Realize that if you did the BPO correctly, and found out what the agent submitted it at, you’ll know where the loss mitigator is going with the price. For example, if the BPO came in at $160,000, then you know the loss mitigator will come down to that price and that they’re just trying to get you to come up. If, however, the BPO came in at $199,000, then you know the loss mitigator will hang closer to the $194,000 number. Make sense? Realize that most of the time when you’re doing a short sale on a pre foreclosure, the loss mitigator is going to lie about where the BPO came in at. It’s just what they do. That’s why you need to do your best to find out what number the agent submitted it at. With your own techniques to counter the loss mitigators, you will get more deals done, and greatly increase your profit on those deals. For example, as I developed better negotiating techniques, I saw an increase in profit (per deal) by $10,000 to $20,000… PER DEAL!
The technique of being the “negotiator” will put you on a more level playing field with the loss mitigator and most adversarial tendencies should be avoided with this one technique. Of course there are many techniques to use in your negotiating, more of which we’ll cover in more blog posts.
Now go get some deals!!!
