I have about 7-8 files in negotiating right now with about 4 different banks that have all been assigned negotiators and have had BPOs performed on them. Most of them even with 2 BPOs or appraisals. All 7-8 file bank negotiators are not really negotiating my offer at all. They all will tell me we need to NET this number and if we dont the file is dead. I have showed up to all of the BPOs with repair lists and comps and all of the BPOs/Appraisers have thanked me and have indicated that they will come in around the same value that I have. I do pull the lowest NON-REO comps and usually dont adjust much for repairs if at all. Usually the banks NET number that they come back to me with is higher than what me and the BPO/Appraiser have thought the property is worth.
I thought at first that the BPO/Appraiser was just lying to me when I met them there and then was going back to the bank and giving them a higher number. I have a hard time beleiving this now that it has happened on all of the files.
Are more banks starting to cut out the negotiating part of the process and going with this is our NET number you either hit it or it goes to foreclosure. Also note these are not FHA deals either. Are they bluffing on this number to see if they can get more than the BPO came in at? When the bank tells me this net number I usually try a verbal counter and tell them that I can supply a modified purchase agreement, HUD1, and POF as well. Everytime I have told them this they have told me not to waste my time that if this number is not hit the case is closed. I have went ahead and sent some of these things in and the negotiator seems to get mad and not respond for another 10-15 days only to tell me that they are not accepting below this amount.
I am wondering if it is the fact that the property is listed and they want to hold out for a better offer? Should I disclose to them I am an investor and this is my offer and there will be NO other offers on the property to them other than mine? Should I hold out longer and see if they will just come down off of that number at all? Does the fact that my state has a stable market with a very short foreclosure process hurt me on getting these properties reduced in value?
Here is an answer you probable do not want to hear, but it all depends. Here is why:
1) If your area does not have lots of foreclosures, this will have an effect on the numbers.
2) The numbers you want to pay might be actually to low.
3) Some Lenders will state, " We need to net this amount or nothing." This sometimes is a way to try to get more money.
Here is my advice:
1) Play the game harder. If this was easy, everyone would be doing it!
2) Try to never make a verbal offer. Send in counters in writing.
3) Add items to your counters that will justify the offers.
4) Wait! This is the hard one, but waiting will sometimes work.
5) Talk to the person you are working with, and get freindly. Make this about the property, not your profits.
6) Ask them to send the file forward with your counter and items from #3.
7) Do not wait for them to contact you, contact them. But, do not harass them.
8) Show your deal to a person that you know that has closed deals, and ask for an opinion. (They REALLY need to know the area and all that goes along with this certain deal.)
I think the above 3 points Crosswind made are critical. These are negotiations and there is really no pre-determined path to take.
I hate verbal offers. When a negotiator has a pile of of 100 cases to manage, the last thing they want are long drawn out negotiations. So, in effect, when you hear "we need to net $ X, then that is them telling you I am tired of dealing with this file and it is time to move on.
I was working this deal in September where the guy told me "the investor said he needed to net $175K". The negotiator even told me to not bother countering I sent a written counter -offer slightly above my original offer at $143K.
Three weeks later, I got a call back from the negotiator saying the same exact thing, the " the investor said he needed to net.... $167K. YEah, same speach, different number. Needless to say, after two more WRITTEN counteroffers, I finally got to a good number.
Point three is also very good advice. Do not blow all your counterpoints on the first counter.... This is an endurance race not a sprint.
Lastly, I like pre-notice short sales becuase you really can screw with these guys by just sending in counter-offers to keep the file open longer. Wear them down! Wait two weeks and send in another counter offer, or send in another offer under another entity name. I have seven entities, you should too.
Nice reply crosswind!
The stable market does have a factor and the short foreclosure will definetly have an effect. Also:
1. If the property is listed, make sure it is listed for an amount near your offer and is active contingent until you hear back from the negotiator with your first counter. The last thing you want is a negotiator seeing a full price listed on the MLS.
2. You cannot hit a home run on every deal. You need to be patient.
3. You are trying to offer the lender an alternative to foreclosure, if you do not have foreclosure comps, you may have trouble convincing them to take a discount.
They are concentrating on Net proceeds, so you need to show them they will net more selling to you than they will as a foreclosure. Really... this is the key!
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Nov 04 '09, 09:11 AM
