Can anyone suggest REO negotiating tactics to get them to accept the lowest possible price?
August 4, 2010 by gtsay
Filed under Foreclosure Properties
Question by Gene F: Can anyone suggest REO negotiating tactics to get them to accept the lowest possible price?
I want to buy and live in the property next door to me. The place is a shambles and there is damage to my property from the unpermitted activites of the previous owner. The property is not worth what is owed on it. The current owner has filed for bankruptcy.
Best answer:
Answer by Christopher B
There are no tactics besides making a low ball offer, and proving you have the funds to do a quick closure to make it more enticing. You would be more successful if you were willing to make offers on more than one property. Because you are focused on that one property – the advantage is in their hands. I would not let that on to the Realtor, as he is obligated to report back to the seller what he learns as he is representing the seller.
Oops – did you say the owner filed for bankruptcy? Then I take it they still own the property and this is not an REO (Real Estate Owned by the lender) – thus none of the above applies. Once bankruptcy proceedings begin, all lenders are not allowed to approach the owner of the loans until the proceedings are completed.
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First you need to go over there & express concern about his bankruptcy & offer to help, by not letting his house go into foreclosure.
Find out how many payments behind they are. You may be able to help them through a “short sale” which is where you will negotiate with the bank that owns his note on a fair & low price.
He will have to show “financial hardship” why he can’t make his pymt., that should be easy with the filing of the BK, then you need to show the bank “comparable sales” in the neighborhood, even if they come in higher than what you want. Because ultimately you need to show how much worse off the subject property is.
If the current owner is OK with exploring the short sale with you as the buyer negotiating with the bank, it would be wise to order a professional home inspection, that way you can send this report to the bank (they’re not going to take your word for it , that the property is in bad shape, you need to prove it to them)
If it looks like this could work out for you & you may buy through this short sale, don’t hesitate to also ask the bank to pay most of your closing costs. They WILL pay it if it “makes sense” for their bottom line.
Good Luck, if you have any futher ??’s feel free to email me, through Y!A’s providing its’ users the email option.
Make a low offer you can live with. If they counter, counter back to them and so forth. When they finally reject your counter (could be counter offer #5 even), you should know their current breaking point.
This tactic is risky as you could end up losing the home…..If you really love the home, it may be difficult to find the absolute lowest price they’ll do. You have to be prepared to walk away, and hope they chase you back.
Number one tactic: be their friend. People are more likely to sell to friends first at a lower price than to someone they don’t know. If you are not friends with the person, they you will pay a premium or will get into a bidding war. Anyone would love to jump on an undervalued property.
If you have the cash, then contract a 15 day closing, ask the agent to represent you also as a buyers rep (or someone in their company), they will get a fatter commission and will love working with you over someone else, who will give them a lower commission. Also tell them you are considering letting your property go and may need an agent for that. When the agent sees these sales, they usually work in their favor and not the seller’s favor. You pay slightly more than going FSBO, but you should make up for it on a reduction in the asking price.