Negotiations with bank owned foreclosure homes must be a win-win for all parties involved to create a successful offer that’s going to be accepted. It just can’t be one-sided all in favor of the one side of the transaction.

I’ve seen countless offers with legalese a mile long that could have been stated in a few sentences, but every possible concern in the world, even ones that weren’t concerns were addressed. This scares bank owned foreclosure home sellers away many times when compared to a simple straightforward offer.

As far as bank owned properties, it would be good advice to agents to not waste their time with “lowball” offers. A blind squirrel finds an acorn once in awhile, I get that, but if you’re set on making low unrealistic offers by faxing one page letter of intents (LOI) to purchase with follow up purchase contracts to follow on acceptance of the LOI, at least let some DOM (days on market) occur before attacking. No seller is going to be “Johnny on the spot” to accept an extremely low offer without some DOM tenure under its belt.

One of the creative ways I’ve seen some of the cash buyers come in with offers lately is with full price earnest money offers. In other words, if the price is $50,000, they put down $50,000 as earnest money. All things being equal, which offer would you choose between one with $500 earnest and $50,000.

Kind of a no-brainer, isn’t it? Or is it?

I’ve seen these get accepted only to fall out in the inspection period, as most of these type of offers  on foreclosures are from investors, some of whom haven’t even seen the property. It is a good way to tie-up the property, so some bank owned sellers have now countered with waiving the inspection periods, or making a portion of the earnest money non-refundable to test the commitment levels.

No one has time to be strung along.

We all don’t have full cash earnest monies to invest, but I will say that if you want to sway the seller, one of the biggies is large earnest money. All things being equal, they’re choosing the larger earnest money offers because of the higher level of commitment or perceived strength of the offer. Let’s face it, $10,000 versus $500 will turn anyone’s head, I’m sure you’d agree.

Shameless plug: I’m finishing up a compilation of great bank owned negotiating strategies in my latest report entitled, “REO Offer Negotiating Secrets Revealed,” which will be released in about 30 days or so to a limited audience.

It will be jam-packed with great field tested insights on how to get your offers on foreclosures accepted — even when competing in multiple offer situations. My team and I have personally used several of the strategies very successfully to beat out other buyers over and over again.