I am often asked about the process of negotiating short sales. When people ask, they generally think that there is some magic formula or process that is universally followed to get a deal done with the bank. This could not be further from the truth. Here is the key, when conducting any negotiation, you cannot truly win without knowing what is motivating the other side of the negotiation. Furthermore, the motivation of the other party is never obvious.

For example, when two people decide to get divorced, they sometimes need to sell the house that they own together. Invariably, many outsiders will observe, "They need to sell, they are getting divorced." And as a result, buyers and real estate agents automatically assume that the sellers are motivated, due to their situation. In reality, in a divorce the divorcees may not actually be thinking clearly. In many cases, they may do everything in their power possible to stall the sale of their property in order to hurt their ex.

By now, you are probably asking, "What does this have to do with How to Negotiate a Short Sale?" Well, the same theory applies. What motivates a bank to get a deal done depends on the cumulative motivations of the employees that are in the process of the short sale. From the receptionist to the managing decision maker, it is critical to do everything possible to learn as much as possible about each individual motivation to get your deal done. This can be the difference between your deal getting pushed forward, or getting rejected.

Here is a quick example. We were negotiating a short sale about three months ago when we were faced with a situation that defied logic. All parties had agreed to the terms of the short sale and the transaction was ready to close except that the lender needed one more document before closing the transaction. If they did not receive the document by the end of business, then they were going to proceed with foreclosure and cancel the short sale, even if it meant that they would lose money. Well, we were on track to get the document to the bank by the end of business when I received a call from the "case manager". She said, "Hey, if you don't fax me that document in the next five minutes, then this deal is dead." I was very confused. We had until close of business. It was only 3:30 in the afternoon. I asked the "case manager" what was going on and she said that her "shift" was almost over.

I almost blew a gasket. Her shift? The bank was looking to lose tens of thousands of dollars, the seller would be foreclosed on, and the buyer would miss out on a good buy all because her shift was almost over? Before losing my composure, I thought for a minute. What is in it for the case manager? Why would she care if this transaction gets completed or not. So I asked her, "Is your job easier if this deal goes through, or is it easier if it dies?" She said that it was a little easier if it went through, but she just wasn't going to stay late. I asked her if any new shifts were starting or if hers was the last of the day. She said that in fact, a new one was now starting. I asked her if she had anyone coming on duty that could help her out so that her job would be easier. She said, "Great Idea!", and she meant it.

Conversely, some decision makers may be getting graded by their "investors" on how well they mitigate their losses. In these cases, you are still thinking, "What is their motivation?" A common motivation for employees is to "look good" to their boss. In these situations, give the employee the ammunition to look smart to their bosses. Examples would be recent market data showing a declining market or recent information about the area that indicates lower real estate values in the future. Both of these items would show how the bank is mitigating loss, thus making the employee look like a hero. If you satisfy the employees motivation, then your odds of getting your deal done will rise dramatically.

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