Best Negotiating Strategies to Win the Market
Justify Low Offers with Documentation Keep in mind that lending institutions must price bank-owned properties at “market value” to prevent the negative impact that underpricing would have on the values of other properties in the neighborhood.
There are, however, extenuating circumstances—specifically, the substandard condition of a property—that legitimately affects the market value, and, as a result, justifies a deeply discounted sales price. It is possible that, in some cases, a property is priced at a ridiculously high amount.
This could just be a mistake on the part of the appraiser. Another explanation is that the appraisal was initially prepared a while ago, when the property first went into the bank’s inventory, and when it had a kitchen. Since then, the property may have been vandalized and, as a result, the value is substantially reduced.
If you want to purchase the property, don’t just send in a low offer with a note that the amount you are offering to pay is low because “the property needs a lot of work.” Instead, take pictures of the vandalized rooms to accurately illustrate its present condition, (i.e., the fact that most of the kitchen has been gutted), and send the pictures with estimates from two contractors along with your offer. By doing so, you are helping the lender justify its decision to accept an offer that is lower than what it thought was market value.
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