One of the reasons that short sales pose such a challenge for real estate agents is the process of negotiating a short sale with the mortgage lender. For a standard home sale, the primary concern is to find a buyer willing to pay the price at which the home is listed. With a short sale, however, you not only have to find a suitable buyer, you also have to persuade the bank to take a loss on the mortgage loan, selling the home for less than the value of the note. The best way to win the lender to your cause is to build a relationship with the bank, specifically with the lender negotiator.
Typically, a bank does not actually hold the note for the mortgage; rather, the note is held by a large investment company or by some other investor, such as a 401(k) program for a worker’s union that bought a package of derivatives of which the mortgage loan is a part. The bank is just the servicer – it collects the mortgage payments, distributes them, and negotiates any short sale or foreclosure activity. The decision-maker on the approval of the short sale is the actual investor who holds the note and not the bank.
When you are negotiating with the bank, the lender negotiator is really the ‘middle man.’ You want them on your side, so that when the short sale offer goes to the note holder, the lender negotiator is working on your behalf and not working against you on the investor’s behalf. To accomplish this, you have to build a relationship with the negotiator.
Just like with dating, first impressions mean a lot, and you don’t want to come off as arrogant. If you introduce yourself with the attitude that you are coming to the lender’s rescue and that the short sale is the best deal the bank will get, you will soon find the negotiator is your adversary and not your partner. Treat the lender negotiator like a teammate, and cast a vision for the goal of negotiating the short sale as a win-win: the homeowner can make a clean start, and the bank avoids the burden of carrying the foreclosed property on its balance sheet, limiting its ability to make new loans.
Here are four additional tips for fostering a strong relationship with the lender negotiator:
Strive to get on a first name basis. When you first speak with the negotiator, look for natural opportunities to get to know them more personally. Ask what city they live in, where they’re from originally, and how long they have worked for the lender. A little small talk can set the tone for a congenial negotiation going forward.
Always treat the negotiator as a team member. You don’t bark orders at your peers, and neither should you make demands of the lender negotiator. Instead, ask for favors.
Demonstrate respect. Express your appreciation for the negotiator’s willingness to help with the short sale, and always be very respectful and thankful for whatever they do.
Be the single point of contact. If your client or another team member is talking with the negotiator, it will cause confusion and you will undermine your position. In the same way that two people can’t play one poker hand together, you shouldn’t tag team with someone to speak with the lender negotiator, because inevitably your strategies will conflict.
Negotiating with the lender takes practice and finesse. The more short sales you complete, the more comfortable you will become with the process. If you would like more information about negotiating a short sale, please contact our office at 972.342.0011. We will be happy to assist you.