Short sale transactions can be complex to negotiate with lenders. Hence, real estate trainer and educator Kathy Mehringer’s definition of short sales: “A transaction where nothing is certain but for the uncertainty.”
Mehringer, director of risk management for Coldwell Banker Residential Brokerage, Southern California companies, offered tips to negotiating short sales during her session, “Short Sales, REOs and Foreclosures: Still Hot” on Wednesday during the California Association of REALTORS® Expo in Anaheim, Calif.
Mehringer, who often educates real estate professionals on short sales and foreclosures, offered the following negotiation tips at her session:
1. Don’t give up. When a lender turns down your short sale offer, do not view that as the final answer. Too many real estate professionals assume that a firm “no” from a lender means they’ll never accept a short sale on that home.
“You can’t see ‘no’ as an answer — see it as an opportunity,” Mehringer said.
Follow up by asking the lender: “What will you accept? What can I do to make this offer better?”
Remember, the lender is supposed to get the highest price for the bank; “no’ is merely the beginning of negotiations.
2. Earn their trust. Lenders don’t always trust real estate professionals when it comes to short sales negotiations. Mehringer has learned the reason for much of their distrust: They believe listing agents put a home on the market for a significantly lower price than what it is worth and then waste their time by submitting a ridiculously low offer and present it as the best possible offer for the home.
“Lenders think you underprice short sales,” Mehringer said. “We need to show them that we are trustworthy and properly demonstrate the value of the property.”
After all, your job when representing a seller — even in a short sale transaction — is to work to get the highest and best possible terms for your seller, she told attendees.
3. Lose the low-level clerk mentality. Mehringer said that she often hears from real estate professionals that the lender isn’t cooperating. But how is your behavior toward them? Telling the lender such things as “if I don’t have an answer by 5 p.m. today, the buyer will walk” is not going to work in closing a short sale faster but will serve as a turnoff, Mehringer said.
“You will get more by being nice to people,” Mehringer said. “And being nice doesn’t mean that you have to be a push over either.” Always be professional and courteous in your contact with lenders.
Also, realize that a short sale is optional for a lender. “It’s a business decision,” Mehringer said. “A lender may elect to cooperate to save the expense and time of foreclosure … but it’s purely a business decision — it’s an algorithm.”