BiggerPockets

I've been working on a difficult deal, but I just know that it should be doable. However, up to now, the seller and I can not come to terms on the price.

I think the experienced BP pros (such as yourself) could maybe help me structure the deal in another way.

Background: The seller has a 3200 sf office/retail building that she would like to sell with owner financing. She owns it outright (paid it off in 2001). She bought it with owner financing in '94 for $125k, 9% interest.

My plan is to buy the building, move my office into half and convert the other half to a microbrew tap room. (I'm an architect and have already done the zoning/ liquor license verification.)

Seller is asking $275k. The comps don't justify this. The building is also in rough shape. She hasn't done any maintenance or upgrades in the 18 years she's owned it. I see no justification for doubling her money (the neighborhood has not changed either.)

She wants to close shop (it's practically empty and she has already retired for all intents and purposes.) She wants to hit the road in her RV and get a regular income from the payments.

She is so focused on price that we have not been able to talk terms too much. I gave her a formal offer in writing (in person) of $176.5k with 10k down and 5% interest. I thought this was going to be a starting point of negotiation, and that we'd negotiate toward 200k. Her agent called mine to say "no thanks".

I think the key is to frame the offer differently; talk income per month or some other angle. There is no other interest in the building. It has been on the market one year now. What do you think?

Get your agent to ask her agent to give comps that support the 275,000 value.

You want to see how they are arriving at their price in their head.

10k down isn't even 10% of your offer.It wouldn't even cover foreclosure costs most likely if you defaulted.

First figure out how much the seller is wanting down.The sellers plans might hinge on having XX numbers of dollars to live off of while traveling and then getting payments.

When I look to buy a restaurant sometimes the sellers are retiring and need at least half down to live off of and replace that business income.

Ask your agent if it's the amount down,the interest rate,or the purchase price they object too.Could be all but you are trying to nail down what is more important to the seller out of the three.

I voted for Joel reply. It was good, imo.

Mark- you need to remember that you're asking the seller to do you a favor by carrying the financing. You have to provide something extra to get seller to do the favor. I don't see any sugar being offered. Joel mentioned the 10K not covering possible foreclosure. Heck, it doesn't even cover commission and closing costs. The interest rate is sfr owner occupied rate! You're offering nearly FORTY % less than asking price! I probably wouldn't have countered either.
Were you asking for 30 year amort and no balloon also? My guess is yes. Owner financing is tough to find, but your offer made it impossible, imo. Rich

As a real estate agent, I would send her comps for the neighborhood and recently sold properties. Then I would send an excel spreadsheet outlining how much rent/interest the owner will receive.

Another idea could be is to make her a partner in the Microbrewery. You supply the skills and hardware, she supplied the building and makes the improvement. This way you both profit and don't have to worry as much about funds and liability

Mark, unless this is the last *nut* in the neighborhood, why are you trying to crack the hardest one?

If the current owner believes it is one value ($275) and has reinforcement from the realtor next door, as Rich pointed out, your offer is 40% lower than her mindset.

Your offer still may be at market value but she is not selling at that price.

The easiest answer is "Next" ... that is find an easier nut to crack.

PS ... Interesting flooring

@ Mike, thanks for the idea about refi-ing. That could work. Looks like you didn't read my response two up from here. I did get an estimate.. check it out.

The owner financing is her idea. I followed my agent's advice a bit here - he thought since she had no offers in a year, in a dead market, that she would be ready to negotiate. I guess I was too aggressive - but the building isn't worth anything close to her asking price.

I would love to just move on, but this is the only building suitable for my needs in this very small neighborhood. I need to expand my boundaries, or wait, or have a breakthru - I'm looking for the breakthru.