We have found that the best values are many times found with smaller banks who are willing to discuss short sale options. In this market, people who have yet to let their properties go back to the bank, generally indicate a loan to value ratio that deserves a closer look. In other words, many people who were entirely upside down, let the banks have their properties long ago. The later in the cycle of this downturn a property is relinquished to the bank, the more likely that it is a good value. So how do you get the best deal for you and the bank. Negotiate before the courthouse steps. Don’t wait until it gets auctioned off on the courthouse steps. Many banks will not negotiate as hard once it enters into this phase. Check with your local broker to find properties that have “motivated” sellers. Check public records for original mortgage amounts and offer amounts at 60 to 70 percent of the anticipated remaining loan amount. Many times banks, (especially ones that have real asset managers that will talk to their customers), will negotiate a little harder to keep expenses lower and not allow the property to enter the foreclosure notice process. It saves the bank money and generally lets you get a higher quality property for thousands of dollars cheaper than you might get if the bank were to bid the face amount of their loan at the courthouse.

The bottom line is that we have found that customers who work with a broker prior to a property going to the courthouse steps are twice as likely to obtain a better property at a better price then if they wait for the bank to actually own the property. Seventy percent off of these type properties is generally better than fifty percent off of a bank owned property. Can you find a deal in bank owned properties? The answer is certainly yes, however you might want to try and make a deal prior to the bank actually owning it.