How to negotiate a short sale with a bank

• Move like greased lightening
• Avoid intermediaries
• Get alongside sellers
• Approach banks on even terms

The American real estate market is flooded with foreclosed property, and bargains abound. Two questions face potential investors – where to find the best ones, and what to do when the seller owes a bank more than the property is worth. The solution is simple when you know how short sales work.

What is a Short Sale?

A Short Sale is where the agreed selling price of a troubled property is less than what the borrower owes. Lenders often agree to forgive the difference, if they negotiate this in advance. This is because the cost of a foreclosure is high, and they will in any case have to sell later at the prevailing price.

Short Sale Secrets

• Be quick off the mark. Grab the first edition of the local paper as it comes off the press. Keep a sharp eye out at the Courthouse where first notices are filed. Move rapidly when you get a lead – it is the earliest bird that gets the fattest worm

• Bypass the Intermediaries. Forget about estate agents. They hold up the process while they groom their advertisements. Fire off letters of interest immediately – better still why not pop around.

• Be Proactive. Place your own advertisements under compelling banners, like save your home or fight foreclosure now. If you have the nerve, try networking on the Courthouse steps, or possibly even handing out flyers in the corridors. Court officials may well ask you to leave. That is no problem – you will likely have already got your bargain.

• Team with the Seller. They are probably confused about the process, and will definitely be stressed as well. Explain that you can help each other without lining the pockets of the bank. That is sure to bring them right alongside.

• Get the Documentation Right. Once you have reached agreement with the owner of the property that you wish to buy, move quickly to set things in concrete. You will need the following documents:

• Release form empowering you to contact the lender and foreclosing lawyer directly
• A signed contract of sale with the selling price left blank for now
• Proof of the seller’s financial hardship
• A letter detailing how this hardship evolved

• Speak to the Bank. Do not be scared of banks. They want to sell. Find out their decision criteria, and work within their mind-set. Make sure that you are talking to a decision maker. Be polite but firm, and remember not to be too forceful. In essence, you are selling the bank a solution. The secret to selling is making friends.

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