The main thing to know when negotiating a short sale is that it’s always going to be priced somewhat below market if for no other reason than the fact the seller is looking for a quick sale.

I recently had a home listed for $280,000 when all comparable homes in the neighborhood were priced at $300-$310,000. Now granted, this house needed a new roof, but that plus some fresh paint wouldn’t even come close to approaching the $20-$30,000 margin built into my price. So for all intents, the house was very well-priced.

But then along comes a buyer who, as part of his strategy for negotiating a short sale, says that in addition to a new roof, he would want to rip out the entire kitchen and remodel, as well as replace vanities in both baths… plus a more upscale front door, double pane’d windows, double crown molding throughout, and all new landscaping.

Now here’s what the buyer didn’t seem to understand. I will be negotiating this short sale on behalf of my seller, with a third party negotiator who represents the lender – who, by the time this sale is done, might be taking a $50,000 loss on this loan! The lender’s negotiator is trying to mitigate the lender’s losses, not give away houses. So part of my job in representing the seller is to justify to the negotiator why the list price of $280 is a reasonable and fair sale price.

But you can be sure that nowhere in my discussion with the bank’s negotiator, does he want to hear that the buyer wants to only pay $260,000 so he can completely remodel the house. Do you really think the lender will give a flip about the buyer’s upscale tastes? …and double crown molding?

So in closing, here is the point I am trying to make. Negotiating a short sale is based on the market value of a house less 10% to encourage a quick sale. The buyer is just kidding himself if he thinks a laundry list of upgrades will get the lender to accept a lower price. In short, the lender doesn’t care. If a buyer likes the house and the neighborhood, he’ll buy it knowing he is getting a very fair price based on current market prices.

Note: If you are a homeowner who needs to sell, but is upside down on your mortgage, call me. I have the necessary experience to help you with this type of transaction.