Foreclosure Negotiation Tactics
You can negotiate with motivated homeowners better than those who are still in denial stage or believe that they will manage to escape from foreclosure one way or another.
Negotiation items that work in your favor in buying foreclosure home
- Use time factor: Each passing day is in your favor as the foreclosure auction date comes closer. “Days on the market” (DOM) is another way to affect your negotiation strategy. See if the reason is a serious problem or simply high price.
- List problems: Make a list of home repairs, defects, and problems and use them to justify concessions. You may use one or more at a time. Professional home inspection report is a tool that you may use to objectively base your demand.
Create environment favorable for your negotiation
- Find common ground: Try to explain common interests and win-win possibility to establish ground for healthy negotiation.
- Introduce new items for negotiation: closing costs, allowance for repairs, expenses for moving out, etc. so that you can shift your negotiation away from areas to areas homeowner feels less stress.
- Ask questions liberally: you purpose is to find out what would make the homeowner is trying to get. This may not necessarily be a higher price. You will never know if you do not ask questions.
Use leverage during your foreclosure negotiation
- “Higher authority" approach: This works in all types of negotiations. Don’t make your critical decisions on the spot right away. Even if you think you can afford to give such concession, tell homeowner that you need to check with someone (a higher authority).
- Consider non-price items: Again, the price of the property facing foreclosure is not the only factor to negotiate
- Create more alternatives: Substitute items to bring on the table later if one or more doesn’t work
- Take a break: Stop when you feel that homeowner becomes sentimental and continue when you think homeowner feels more realistic about the foreclosure risk.
Foreclosure negotiation tactics that you can use
- Introduce reciprocity: Foreclosure negotiation is a progressive process. It is a give-and-take process as well. Give a concession when you get one so that you create a sense that one has to give one in order to get one. Reciprocity is the key. Giving all you can at once doesn’t work.
- Exchange emotions with gains: Give credit to homeowner for any improvement in negotiation. You can exchange emotions (psychological payoff) with financial gains. There is no room for ego in negotiation.
- Emphasis on concessions: When you make a concession, give it slowly and indicate how it was difficult for you to make it.
- Stay reluctant: Try not to look eager. You may get more in negotiation if you look reluctant.
You can use these foreclosure negotiation tactics when you negotiate preforeclosure and negotiate foreclosure. See also negotiation tips and preforeclosure negotiation for better tools and strategies.