Negotiating short sales can be amusing at times. I’ve had times where banks have responded asking for a counter offer or cash contribution to such a level that it was actually MORE then the amount owed on the mortgage. Sometimes I truly believe the negotiator for the bank is just testing you to see if you have even the slightest clue what you are doing.
Recently I had a deal where the 1st lien holder countered back on price, just a little but then required the home owners to sign a $63,000 promissory note if they wanted the short sale approved. What was so amazing about this request was the fact that the sellers total debt to income AFTER removing the mortgage payments was over 87%. So with $10,000 of total income and after the mortgage payments were removed they still had $8700 a month in bills and only had $1300 left over for the family. No even close to being manageable.
So how did we go about getting the bank to remove this request entirely? Quite simply we asked; we asked and supplied data to back up our request. We had the home owners review and update their Financial Worksheet and noted specific numbers about their total income prior to tax and their total debt in an average month! As simple as it sounds many times from the seller side we get very upset and aggressive when the bank counters with requests not grounded in the real numbers. The key for us was staying calm. We politely asked that they review the most recent Financial Worksheet and verify if they saw the same thing we did; that their debt to income would still be over 85% after the short sale were complete. Additionally there were no savings or retirement funds to be used. We asked the bank if they did see the same thing we did if they felt there was any way the sellers could contribute monthly to such a substantial promissory note.
The bank responded in less than two business days with a full approval at our contract price, removed all requirements for a promissory note and beyond our expectations released them of the unpaid balance.
This could have gone many ways but I guarantee you that if we were afraid to actually engage in a negotiation with the bank and provide real date to back it up we would have lost but the home owners would have been the biggest losers in that scenario.
Maybe you read this article looking for some magic trickery to dupe the bank or a negotiator. The real secret to success is knowing the numbers and also understanding the dynamics for a bank negotiator. If you provide the negotiator with real and powerful data to support your request you give them what they need to have their supervisor sign off on an approval. In short you help them to cover their own asses with their bosses. Everyone wins!
