It is important to know who the seller of a property is. I don’t mean you need to know them personally but depending on who the seller is will determine how you write your offer and it can dramatically change the dynamics of transaction if you aren’t aware of who you are dealing with. Are you negotiating with a Seller who lives in the property, or a Seller who is a landlord, or is the seller there and it is a Short Sale so you are really dealing with the bank. Is it bank owned and there is more than one bank involved? Last but not least, you may be negotiating with a personal representative of an estate, which can be easy and can be difficult depending on how many people are involved.
Knowing who you are negotiating with is important so you can set your expectations. Most of the time if a home is owner occupied or you are dealing with a home that is currently a rental but you are negotiating with a single owner, the response time can be cleaner and much quicker.
If you want to negotiate on a Short Sale, there are a few things to take into consideration. The homeowner owes more to the bank than the home is worth a this moment in time. In the state of Colorado, you and your agent should be using the Short Sale Addendum to the Buy/Sell Contract, then you should be prepared to wait. It can be well worth the wait for some, and for others, your life cannot be put on hold for the bank to respond. Sometimes they respond within a couple weeks, sometimes it literally takes months. Either way, expect a counter and expect that they are waiting for more than one offer and will take the “best” offer. Best offer can mean different things to different banks. Some banks want the highest and best “net” to them. Some banks will think that the best or strongest buyer is the best deal. Strong buyers are either paying cash or they have cash to put down and they have a lender letter that explains that the buyer is a strong buyer. In the end you are dealing with the bank.
Bank owned properties are just that they are owned by the bank. It could be a small private bank or one of the big ones. Either way, they have their own ways of responding and they want to see strong buyers and highest net. This is exactly what a seller who is a actual person and not an entity also wants to see. If you “win” the bid with the bank, you will be asked to sign an amendment that overrides the Colorado Contract to Buy and Sell Real Estate. As you read through it, you may be unsure if you want to agree to everything in there, if you are not prepared to agree to the banks terms, than be prepared to walk away from the deal.
When negotiating with an actual seller, the seller will agree, counter or reject your offer. Once again, sellers are looking at how strong your offer is. Last week I had a seller reject a buyer who just didn’t look strong enough on paper, not to mention that the offer was not realistic to the seller, but they weren’t putting any money down and their lender didn’t have much confidence in their strength. The seller didn’t think it was wise to take a low offer this early in their listing and at this time of year, when there are so many buyers looking.
Once offers are received you will follow the process guided by the Colorado Contract to Buy and Sell, or the addendum written by the bank. Either way, your REALTOR will guide you to closing.