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I’m not a bank, and you are not broke

This article first appeared on the Intown Atlanta Real Estate Examiner’s page…

If the bank’s stance is a loss for the buyer, then the buyer can wrap things up with this classic walkaway line:

“I’m not a bank, and you are not broke.” (All credit for that gem goes to Sherman Gaskins.)

In the case of a short sale, the stance is “I’m not a bank, and your mortgage lender is not broke.”

Work that one into the dialogue when emotional attachment arises.

Most banks are not broke. Especially the banks and other entities that are holding, managing and listing REO foreclosures. And the Loss Mitigation departments at many of these same banks, the folks who are handling the short sales, they are empowered by massive cash reserves.

These organizations are making a lot of money right now and / or they are well funded…that’s a better way to put it: well funded.

Knowing all of that, bank-owned real estate negotiation is really simple as long as the buyer gains strength from three primary resolutions:

1. The buyer’s expectations must be low.

2. The buyer should have more than one opportunity in the works.

3. The buyer can not have emotional attachment .

More than one opportunity? How low? No attachment?

Think about it like this…

One of the seven habits of highly effective people is that they maintain an attitude of “win / win, or no deal.”

Certainly, real estate transactions are a workshop for this highly effective habit, but bank-owned real estate transactions do not enable the easiest wins. Banks get rigid. Banks are either holding up their profit margins or holding the line on the margin of their “acceptable” losses. Banks are staffed with folks who have rules to follow – rules that are quite often out of favor to the purchaser.

As one example, many short sales requiring bank approval or many REO, bank-owned  foreclosure sales attract multiple offers from more than one buyer. That means that a potential buyer loses the exclusive leverage of a “buyer’s market,” right?

The “win” for the bank is a quick sale at greater than asking price. This happens often enough, especially in the Atlanta submarkets with houses and land selling for under $250,000.

Sometimes, with a short sale or an REO, the bank won’t pay the negotiated value of the buyer’s closing costs. Sometimes, other disagreements arise over price, regardless of “binding” agreement with the seller.

This assumes that the bank even responded at all in a timely manner and started a dialogue. (see point #2 above…)

Banks don’t necessarily subscribe to the first habit of highly effective people, which is “Be Proactive!”

Simply put, banks are not broke.

Fools rush in, where wise men never go…

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