The success of negotiating down secured loans is closely related to how deep the vendor is in trouble. However, having said that I would suggest that even if the deal fits and you do not need to negotiate – I would say as a rule, still negotiate. I have known some lenders give up to 20% discount just for offering to pay the loan off promptly!! Even sometimes redemption fees can be reduced just by asking!!
The same goes for your credit card, if you have the ability just to pay it off – Don’t, first call and ask if there is a discount if you pay it off in full. You can also elaborate and say that you foresee some financial troubles and you want to prevent this from happening. Often a discount is given. This is not a guarantee, but it certainly does work with some creditors.
Now back to the secured stuff; basically the deeper the vendor is in the dirt, the better the negotiating position you are in. However, just because the vendor is in arrears and a total financial mess, a phone call to negotiate will not suffice. Remember the secured lender only sees a small part of the whole picture. Also they have had many phone calls with promises of money soon and alternative solutions that came to nothing.
Your job is now to establish a professional relationship with the lender. Firstly you need to get the client to authorise you to deal on his behalf over the phone – then follow this up with a letter of authorisation signed by the client.
Next step is to get your way through the lenders system, and get a direct line to the person overseeing the case. Tell them what you are going to do, and how you intend to resolve the situation, then do it, and keep the lenders informed all the way by phone call or fax. Even if something goes wrong – tell them! Remember they have heard it all before.
Gather together all information of the vendors “Dirty” situation; Court documents, medical certificates, mortgage/loan arrears, unsecured debts. Basically anything that shows a dire situation. Then fax this information to the lender, you and then call and discuss the situation.
The secured lender thinks he is safe if he holds a charge over the property, your job is to make him feel that he may not achieve full return on his charge.
If you really think this deal is worth chasing further, get yourself a friendly Chartered Surveyor. Look for the independent ones, not the ones that work for large firms. Chat to them and tell them what you do. Once you have found one, you can use him to great advantage. In the majority of cases a Surveyor can easily down value a property to match what you want to purchase for. So once again this is a proper report that can be presented as evidence to the lender.
In some cases you have time, and with time the dirt will stick more to the vendor, thus to your advantage, in order to make a deal. If however you are short on time, then there is always the N244 to get you more time.
Richard from O2 properties used a similar tactic, he asked for 30 pence in the pound and the lender offered 50 pence in the pound. Chris said no! A couple of days later another piece of evidence arrived, Richard presented this and the deal was struck at 40 pence in the pound. This happened a week before eviction!
The other rule to remember is this, even if you fail to do the deal (saving the vendor) and an eviction is taking place; the property is still there for the purchase after eviction!!! |