Expert Negotiation Tactics

[FMP width=”640″ height=”505″ controlbar=”docked” autoplay=”false”] [/FMP]
Remember that we are NOT attorneys or accountants. If ever asked any “legal” questions regarding foreclosure proceedings or a home owners rights, ALWAYS remind sellers of your job title!
1)   Lack of communication and control of the situation with 3rd party mitigation2)   No regulation of short sale mitigation companies3)   Lenders typically do not pay mitigation fees4)   Unethical to ask a buyer or seller to pay unneeded fees

Many lenders will first require that the authorization to speak to them is received prior to doing anything. It is a good idea to go ahead and send the authorization as well as the listing agreement in to the lenders once the listing is secured. This also will serve as a form notification to the lender that the property is offered as a short sale. Some lenders will also pre-approve a short sale file without an offer on it.After the short sale package is submitted, create a follow up schedule. It is a good idea to follow up at least twice a week with each file during most phases of the process, but you will likely be contacting them daily at the end of the process. Once you acquire a large inventory of short sale listings that are being processed, there are many organizational and follow up programs available for short sales, such as Short Sale Commander (, that can help organize and structure the process for you.

The first goal is to get a BPO ordered and get the file assigned to a negotiator. The first questions to ask once a lender receives the file are:

Most of the timelines given by lenders are NOT accurate, and many are an attempt to avoid communication with negotiators.
Some lenders have their own specific agenda and financial worksheets.  Wells Fargo and ASC have several specific agendas that they require with short sale files.  Many of these are available on the “bank forms” section of the preferred partners site.
Be patient with the process, but INSIST your file be processed.
Once assigned to a negotiator, remember that they are your best friend!  Their company policies and practices are NOT their fault.  They are also likely overworked and underpaid.  Treat them well and you will be rewarded.

If you can’t get anywhere with a file, go up the chain!  You can insist files be escalated if “buyers are close to backing out”, or if the file is not getting anywhere.  Do some research and contact those in upper management or short sale department heads via email, you can find these many times by asking on  However once those contacts are established , they should not be abused.

Ask the lender, but the department you contact may be different than the short sale department!
Find ANYBODY to submit ANY offer to purchase the property. Typically a lender will stop a foreclosure process to consider an offer. This will buy more time, usually a few months.
Go to any hearings and request more time from the judge
Do a temporary loan modification/forbearance. This can cause them to drop the short sale.

What to do if there are multiple offers– Notify all buyers and agents that there are multiple offers, and ask for highest and best offers from ALL buyers. Present all to seller and encourage them to accept ONE. Submitting multiple offers to process will confuse the negotiators at the bank, and may also encourage them to ask for MORE money. It also may not be necessary. Once the seller accepts a contract, a property is typically placed as “in escrow” status or “under contract/contingency” status in order to discourage many more unnecessary offers. Always remember that the seller still owns the property; it is only up to the lenders legally to say “yes” or “no” to offers, legally speaking. Getting short sales “pre-approved” – in many areas, 65%-75% of the time the first buyers will withdraw their offer on the short sale. The first buyer is the Guinea Pig in many cases, and will help determine exactly what a lender will accept. Once the amount and terms are approved, it is much easier to find a good buyer who will only have to wait a short period of time for final approval. Some lenders will even send a general approval letter without a buyers name, and an extended period of time allowable for closing. These files may not even need to be resubmitted once another offer is received.

1)   First Ask for buyer to make contribution2)   Next see if seller can contribute to 2nd or repay some

3)   Try again to see if lenders will concede

4)   Offer some commission (last resort)

5)   Wait – Time does cure some things

What if the lenders want to negotiate commission? You don’t have to settle just because they state they will only pay so much. Continue to request 6% on any future HUDs you provide. Some approval letters will NOT state the total commission but instead state total closing costs or a net amount the lenders are to receive. This is also another reason it is good to have a “cushion” with additional estimates on HUD-1 estimates. What if a lender wants the deficiency repaid? This is only applicable in some states, as many states are “non recourse states” and the lender does not have the right to do so. First ask if a higher offer would get rid of deficiency judgment, How much higher? Ask if a seller or buyer contribution will get rid of the deficiency. Make sure the lender is reminded of the borrowers financial hardship. Remind seller that even if all or part of the money is agreed to be repaid with a “promissary note”, it is unsecured debt and no different than unpaid credit card debt. If it is not paid, it is typically turned over to collections and many times will be settled for pennies on the dollar.

Do NOT allow an investor to talk you into exclusively “buying ” your short sale listings, exclusively working with your short sale files, or insist that you should not be mitigating or working short sales! You are capable of mitigation and negotiating short sales yourself, however it is always wise to delegate the responsibility to somebody else in your office such as an assistant or designated processor.