How do you negotiate a deal to bring the price down to where it will be worth it for me?
I have run into people who are weeks away from foreclosure who have about over $100k in equity and they are holding onto it for dear life not realizing that they are weeks away from losing everything. I have tried to inform them about their potential situation of losing everything and that the best I can do is leave them with a few bucks in the pocket to help them with moving expenses or down payment for an apartment or home in the future. I have told them that I will be covering all costs of repair, handling all the paperwork so that they won’t have to go through the burden
How do I make them understand the situation that they are in and ease the pain of having them relinquish their stronghold on their equity?
Sometimes you can’t get to through to these people and carry on. It might help if you ask from the get-go how motivated they are on a scale of 1-10. If they say anything less than 8, tell them you’re only looking to help those who are truly motivated and who understand how dire their situation really is. You’ve got too many other people sincerely looking to get themselves out a similar situation. Then tell
them to call you when they’re an 8 or higher.
It might also help to paint the ugly picture of foreclosure. Right down to the sheriff’s moving them out and changing locks, to people rummaging through their things on the street having a free-for-all.
Then sometimes it’s just not going to work and no matter how much you want to help these people, it just can’t be done. It’s sad to sit back and watch a bad situation get even worse, but you can say you tried.
Sounds like it could have been a very worthwhile deal for you both, sorry it’s working yet, jbut don’t give up hope just yet. If all your ducks are in order things might be able to pull out at the last minute anyway.
Take this for what it’s worth. I have yet to initiate one of these transactions, but here are my thoughts.
Denial has a huge impact on people in these situations. This is most likely the way that they got into this postition in the first place.
They may be extremely motivated, and no matter how dire their situation if you have not created trust and a mutually beneficial transaction. They may feel that you are taking advantage of them.
If they think that you are lowballing them, you will not get the deal regardless. People can be stubborn and would possibly rather lose their house than feel like the are being kicked while they’re down.
How about negotiating an equity sharing deal? It would be better to negotiate for 50% of $100,000 equity than lose the deal all together. Or perhaps, negotiate a low sales price with a lease-back option. This could keep them in the home. Have an agreement to sell them the property back at market value in one year, or even below as long as you calculate your profit into the deal. If they break the lease agreement or are late on even 1 payment, you retain the right to evict them (at this point renters) and sell.