The Art of Negotiation in a Short Sale

A feature article by Judson Voss, Apr 14, 2008         

You’ve found a great real estate investment to purchase, signed on with the homeowners and gotten all of your information in order. All that’s needed is to approach the bank with a short sale offer and close the deal right? Maybe not.

There is an art to negotiation in the real estate investment industry. Negotiating a short sale isn’t simply approaching the bank with your packet of paperwork and your best offer to close the deal.

You’ll need to endure at least two rounds of negotiation with the banks most of the time. So, don’t approach them with your final offer right off. It’s probably best if your first offer to the bank is a price that’s lower than what you are willing to pay.

Send a Cover Letter
Submit to the bank an offer cover letter filled will all of your points to justify the discounted offer you are making on the bank. The banks you usually end up negotiating with get tons of offers for their properties. This submitted cover letter helps you stand out and makes you look a little more professional as a real estate investor.

The cover letter can outline your interest in the property, certain negative aspects you’ve noticed to the default property and your first offer on the property. Don’t be afraid to make a low offer on the property when negotiating short sales. You can always up your offers, but you can never lower them. So, if you start out by giving them the most you are willing to pay for the foreclosure property you are interested in the bidding could quickly enter a price range you aren’t able to afford.

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Make it Personal
Making more personal offers, such as using the cover letter submission, will get you into more negotiations with banks and help you close more deals. You’ll waste a lot of time if you go out make a 100 low ball offers in a very impersonal manner. It just won’t make real estate investment worth the time.

Instead, go out and find ten default properties that you are interested in and make more personalized offers on them. Put together a nice cover letter for each that outlines the points above and you’ll find that you enter more deal in less time. Less time spent means you are making more money for your effort and you are more likely to make that real estate deal.

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