Negotiating the Best Price on an REO Foreclosure

Negotiations can be one of the most thrilling aspects for buyers of any piece of real estate. Since the average member of the buying public doesn’t get that many chances to hone their haggling skills in everyday life, they often relish the opportunity to do so when it comes to their home purchase. With regards to bank-owned foreclosures, buyers who are in the know enjoy optimal negotiation positioning, resulting in fantastic deals.

Real estate negotiations begin with the context of the potential transaction. That is to say, without a full understanding of the home, the market, and the circumstances surrounding both, buyers are flying blind. The word “buyers market” has been thrown around quite a bit over the last few years, which implies that all of the leverage is on the side of the buyers. While this is largely true in many transactions, it is by no means universal. Even today, in some cases buyers find themselves in a bidding war, at the mercy of the whims of their counterparts just like a few years back. The key is to understand what is being offered, and what one hopes to achieve as a buyer.

This is a critical element of any successful negotiation/purchase strategy that is overlooked far too often. One must not confuse the feeling of “coming out on top” with getting a good deal in actual terms. Many buyers would feel better after paying $5,000 less for a home that is overvalued by $10,000 than they would by paying $5,000 more for a home that is undervalued by $10,000. By separating perceived savings from observed savings, buyers free themselves up to unearth fantastic savings in their real estate purchases, especially when it comes to REO properties.

When negotiating for a bank-owned foreclosure property, understanding the home’s list price and where it falls within the value range is a necessary first step, given how REO properties are valued in the first place. To say the very least, foreclosure property valuation is an inexact science. The Asset Manager (entity in charge of handling the foreclosure transaction on behalf of the bank) collects a series of agent-generated evaluations of a home, and makes a value determination based on these findings. Many of these evaluations are “exterior-only” meaning the agent merely drives by the home, snaps a few photos of the exterior, and are then tasked with determining the home’s value. Even when performing interior evaluations, agents must generate market values for properties while taking into consideration amenities, useful life of upgrades, and repair costs for damages. The asset manager, which more-often-than-not is located in another state altogether, then dictates the list value for a property they’ve only seen in photos.

The result is that from time-to-time bank-owned foreclosure properties are listed on the market at values that aren’t in sync with the area value range. Often times, listings that come on the market way under value are met with a storm of offers, some of which may even be over asking price. So as a bargain-hunter, should a competitive offer situation be seen as an indicator that no savings are to be had? No way! The key is to understand that a bargain isn’t defined as sale price vs. list price, it is sale price vs. market value.

When developing a pricing strategy for an offer, agents are full of stupid ideas. Some advise offering some arbitrary percentage under the list price if their clients have the only offer on the table, while others suggest offering some arbitrary amount extra over list value for every competing offer that has been submitted. For starters, one must make their own determination of a home’s market value, irrelevant of the list price. From there, buyers must determine how much of a savings they would feel satisfied with getting, vs. how much savings they would be willing to give up to get the home. If buyers fall in love with a home and will do anything to get it, then negotiating for maximum savings may not be the best strategy, especially in a competitive situation. Sometimes deal-seeking buyers get overzealous in a competitive situation, and offer enough as to eliminate all potential savings, or even go over market value altogether. A good negotiator knows that they must be able to make their own determination of value, and they must not let emotions govern their approach.

Speaking of emotions, they have clouded countless real estate deals over time, especially when the sellers have a personal interest in the home. When buying a bank-owned foreclosure, however, buyers can be as sassy as they want with their negotiation tactics without fear of hurting anybody’s feelings. The banks are financially invested, but not emotionally invested. Telling the banks that as a buyer you think a home is worth a lesser amount is fine, and is not taken as a personal affront. Yet if not done properly, it won’t lead to any positive outcomes either.

Lending institutions and asset managers rely on market data when determining a list price, and are open to relying on the same when deciding whether or not to accept an offer. If an offer is made that is under list price but is backed up with market data indicating that the price is justifiable in the market area given local value progression, buyer demand, economy, etc., then the banks are much more likely to play ball. The best way to steer things towards a positive result when negotiating with the banks is to speak their language.

Price is the primary factor that drives negotiations, but is not the only variable in the equation. Buyers can sweeten offers in a variety of ways, some of which come at no additional cost. For example, a buyer who has been fully vetted by their lender and has their inspectors on standby can tighten all of their contingency time frames, offering a faster, more attractive closing. If a buyer isn’t entirely happy with the present condition of the home, they may be able to negotiate for repair credits, something that is not generally known about buying bank-owned property. Credits are preferred by banks to performing repairs themselves, which often involves more red tape than they would like. By forming the other elements of an offer as per the specifications of the lending institution on the other end of the deal, one can add appeal to a deal that can sufficiently offset a lower offer price.

Given the market conditions across the country, there is an abundance of great deals on REO properties out there for the taking. Whether the goal is paying bottom dollar, or getting the home that is desired above all others, the path to success is essentially the same. By properly defining true value for any home, and formulating an offer strategy that is attractive to the banks and asset managers in all of the most important ways, buyers can achieve any goal when negotiating their next home purchase.

Proficiently Preparing Eleventh-Hour Presentations

You share the company of hundreds of thousands of other professionals around the planet if the thought of public speaking fills your mind with dread, and your stomach with butterflies. Public speaking is often a daunting enough prospect in its own right. What if you are coerced in to giving presentations at the very last minute?

You know all about failing to prepare and preparing to fail. You are correct in assuming that even the most competent and experienced presenters remain steadfastly true to the mantra of preparation. In that respect, being expected to deliver presentations with only 24 hours notice, or even half an hours notice, spins sideways what you have been taught to trust. Yet happen it can and happen it does. Just like mastery of the art of public speaking in general, impromptu public speaking challenges are tackled head on with practice, plus a few common sense ground rules in your back pocket.

1) Plan To The Power Of Three
You need to grasp your subject matter and logically organise it when preparing to deliver presentations happening upon you at the eleventh hour. The notion of a beginning, a middle and an ending is nothing new you to you. It is a primary basic that you were taught to apply to story writing during your school days. The same applies to impromptu presentations. Your clarity of thought is enhanced and your panic reduced by arranging what you need to say in to an orderly opening, a main body, and a closure.

2) Start Well To Continue Well
Your opening gambit should pack a powerful punch. Bear in mind that last-minute presentations are not usually random, but are required to address specific issues somewhat urgently. Direct questions usually make attention grabbing headlines. Try getting off on a good footing by stating the task at hand – for example, this is what we are working on, this is where we are currently at, and this is where we intend to be, so how do we go about getting there as efficiently and quickly as possible? Bingo! Isn’t that the very essence of what your audience is there to find out?

3) Remain Committed
Regardless of the duration of your short notice presentations, hark back to the power of three in the main body by breaking it down according to your introductory statements. Reiterate the current position. Expose and clarify potential concerns and impediments. Confirm the plan of action moving forward, addressing the points you have already raised. This provides your audience with a situation, issues and solutions.

4) Wrap It Up Potently
The closing statements of any presentations need to be as potent as the openers. In fact, they become one and the same thing when you bring your closing section right back to start and reiterate your opening gambit. This is your check back to ensure that all concerns have been addressed and that your audience understands the journey you have just taken them on. Furthermore, closing questions, and calls to action, give both presenter and audience ample opportunity share their views, clarifying that everyone is singing from the same hymn sheet and are ready to move cohesively forward.

Five Ways to Make Video Presenting Easier

Every time someone presents on camera, the experience is unique. But you may notice recurring obstacles that prevent you from concentrating, or enjoying the process.

Presenting on camera is something that you can learn to do with confidence and ease. You can learn the skills from books, audio courses, online courses, classes and boot camps.

Here are some challenges people have shared from me, as well as some practical ways to overcome them.

1. Getting Started
Making the commitment to practice video presenting is often the biggest hurdle for busy professionals.

“I’ll do it someday,” becomes the ever-present item on your To-Do List.

Solution: Start experimenting today. The next time you have a flip cam in your hand, don’t shy away. Eventually, try to get on camera for a few minutes every week…if not every day.

2. Getting Over It
Chasing after the perfect image is hard work for every presenter.

“I hate my hair…I hate my wrinkles…I should lose 10 pounds.” These are the kinds of comments that keep you from standing in front of a camera and making an impact.

Solution: It’s a common problem–but once you start providing valuable content, your focus shifts. Your viewers are much more concerned about what you are offering than judging your appearance. They will value your ideas, tips and learning points. If you start sharing now, you’ll find the rewards of video presenting will out number the concerns about how you look.

3. Finding Time To Improve
Your crazy-busy day and urgent demands of your business make it challenging to find time to improve your video presentation skills.

“My day is already overbooked and I’m running as fast as I can!”

Solution: Schedule time with an expert coach. If I don’t work with an expert, I tend not to do it at all. Remember, presenting on video is a critical skill for professional success. Remind yourself why you want to gain confidence in this medium. Make the call.

4. Moving On Purpose
Fidgeting, shifting weight, and pacing distract from your professional presence on camera.

“I don’t know what to do with my hands, feet; how to stand, when to move and when to stand still.”

Solution: Stand tall and deliver your key point. Move on purpose. Then stop. Deliver your next point. Focus on purposeful gestures, emphasizing key ideas. If you aren’t sure how to move or are concerned about body language, take a video presentation class. You’ll get the attention and personal feedback to take your skills to the next level.

5. Presenting For Today
Your body, speech, and delivery are unlikely to be radically different from one day to the next. Avoid starting off with unrealistic expectations.

“I need to be like a talk-show host or professional television star.”

Solution: Accept that the most important thing about video presenting is this: starting! Realize that your skills will develop gradually, with training, coaching and practice.

With steady steps, you can realistically expect improvement. With a steady commitment, you will be able to reap the benefits of video presenting. It’s the fastest way to reach more clients and grow your business.