Renewed Offer & Negotiating a Deal

Renewed Offer & Negotiating a Deal

Investor · NY · Member since 2024 · 23 posts · 15 votes

Hello! About 2 weeks ago, my partner and I recently made an offer of $325k (an offer which was over $200k below asking) on a duplex near a University. We ran some comps in the area and came to the conclusion that the house was WAY over priced. My local realtor agreed. In fact, no other duplexes in the area have sold for anywhere aroud this asking price ($600k). After a few days, the offer was rejected with no counter. According to my realtor, the seller's agent is difficult to work with and does not have the best reputation in the community. The house has been on the market for over 80 days with no other offers. 

I'd like to make another offer with the hopes that the sellers will reconsider. I did some research and found out that there are 3 owners, with one deceased. I was thinking about making a renewed offer at the end of the month. I do not expect the house to go into contract before then given its extremely inflated price. Do you suggest I increase my offer? My maximum allowable offer is $380k, but I was hoping to land around $350k. I've heard of situations were the buyer will offer the same or even less for the second offer given the lack of interest in the property.  What are your thoughts on this?  This property has amazing cash flow and already has tenants lined up for next year. I think buyers/investors are just spooked by the listing price. 

Any and all advice is appreciated. Thanks in advance!

0Reply
141 views

Most Popular Reply

Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
9mo

@Victoria Spagnolo, since I am in your market I looked up the listing you are talking about. I am also a realtor, but NOT looking for your business (just to be clear). 

Assuming I am looking at the correct listing. Yes, it is a side-by-side "duplex" or locally known as a "double block", BUT it has set up to have 14 bedrooms total!!! It is rented out as a student rental generating $5700 per month and is FULLY rented. 

So, this place is valued NOT like a double block rented to long term tenants but more like a commercial property based on its income. So, the asking price is not nearly as off base as you seem to believe. 

Here is another 14 bedroom student housing small multi-family that sold a year or so ago for $613k:

Comparable 14 Bedroom Small Multi-Family

Comparable sales is really not stictly the way to think about a place like this. They can and will sell for more AND the comp that I cited was FINANCED. So, it appraised for that value. Yes, it was broken up into 4 apartments rather than 2, BUT these places are NOT RENTED BY THE UNIT. They are "rooming houses" rented by the bedroom to students. So, they are essentially 14 unit places with 14 separate leases!

See this reply in the discussion

8 Replies

Jump to latestLatest
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    9mo

    @Victoria Spagnolo

    hello.  it's your decision, of course, but it seems like they want too much... so i'd move on to the next deal. you didn't offer what they wanted, so they didn't counter.  they're under no obligation to counter, and you're under no obligation to try again.

    and... i am always skeptical when i hear that something has "amazing cash flow," especially if it's on market.  i would just run your numbers very conservatively...

    hope this helps

  • Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
    9mo

    @Victoria Spagnolo, since I am in your market I looked up the listing you are talking about. I am also a realtor, but NOT looking for your business (just to be clear). 

    Assuming I am looking at the correct listing. Yes, it is a side-by-side "duplex" or locally known as a "double block", BUT it has set up to have 14 bedrooms total!!! It is rented out as a student rental generating $5700 per month and is FULLY rented. 

    So, this place is valued NOT like a double block rented to long term tenants but more like a commercial property based on its income. So, the asking price is not nearly as off base as you seem to believe. 

    Here is another 14 bedroom student housing small multi-family that sold a year or so ago for $613k:

    Comparable 14 Bedroom Small Multi-Family

    Comparable sales is really not stictly the way to think about a place like this. They can and will sell for more AND the comp that I cited was FINANCED. So, it appraised for that value. Yes, it was broken up into 4 apartments rather than 2, BUT these places are NOT RENTED BY THE UNIT. They are "rooming houses" rented by the bedroom to students. So, they are essentially 14 unit places with 14 separate leases!

    • Victoria SpagnoloPro Member
      OP
      Investor · NY · Member since 2024 · 23 posts · 15 votes
      9mo
      Quote from @Kevin Sobilo:

      @Victoria Spagnolo, since I am in your market I looked up the listing you are talking about. I am also a realtor, but NOT looking for your business (just to be clear). 

      Assuming I am looking at the correct listing. Yes, it is a side-by-side "duplex" or locally known as a "double block", BUT it has set up to have 14 bedrooms total!!! It is rented out as a student rental generating $5700 per month and is FULLY rented. 

      So, this place is valued NOT like a double block rented to long term tenants but more like a commercial property based on its income. So, the asking price is not nearly as off base as you seem to believe. 

      Here is another 14 bedroom student housing small multi-family that sold a year or so ago for $613k:

      Comparable 14 Bedroom Small Multi-Family

      Comparable sales is really not stictly the way to think about a place like this. They can and will sell for more AND the comp that I cited was FINANCED. So, it appraised for that value. Yes, it was broken up into 4 apartments rather than 2, BUT these places are NOT RENTED BY THE UNIT. They are "rooming houses" rented by the bedroom to students. So, they are essentially 14 unit places with 14 separate leases!

      Thanks so much for your reply, Kevin. I visited the property and there are actually 12 rooms and 10 actual bedrooms. Some rooms which the listing agent deemed "bedrooms" aren't legitmate bedrooms. Also, the comp you sent me is a triplex or quadplex (I cant remember - I actaully lived in this house years ago!). I private messaged you. I'd love to chat more about this today. 

      Thank you again!

  • MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
    9mo

    I might be confused but if you only approved for $380,000 I'd stay in that range as you view properties. It is unlikely to find a seller willing to take 50% less than asking price. In my area multi-family and commercial properties can take longer to sell than SFH and townhouses so sitting a few months isn't always a sign the property is overpriced. Best wishes with your property search.

  • Rental Property Investor · Malvern, PA · Member since 2016 · 1k+ posts · 936 votes
    9mo

    You might also want to consider changing your agent if the agent didn't catch what @Kevin Sobilo posted above. That should be basic due diligence for any agent.

  • Benjamin AakerPro Member
    Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
    9mo

    Other posts above have discussed the valuation and I agree - this should be underwrited with an income approach rather than using comps.

    Regarding the negotiation, you should try to do more research on the owners. There likely is a pain point that you can help them fix. They've been on the market for 80 days and may not be in a hurry to sell. Why do they want to sell? Try to get in contact with the sellers yourself and talk with them. 

    • Victoria SpagnoloPro Member
      OP
      Investor · NY · Member since 2024 · 23 posts · 15 votes
      9mo

      @Benjamin Aaker you make a great point. Thanks for this! I'm going to do more research on this today. 

  • Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    9mo

    1) Weird the sellers agent told your agent they didn’t have any offers. If I was the seller I wouldn’t be happy. 

    2) If this property is “WAY” overpriced, buy one of the other properties that are “correctly priced”.

    3)if they are making $50k or more in rent on a property you think is worth $350k, why would they ever sell? I would hold until the end of time. That’s a return they probably can’t replace. 

    4) If one of the owners is deceased has it gone through probate already or is there at least a 3-6 month built in delay, hence no hurry to sell. 

    5) Do property prices/values not increase in the spring in your market? The might be willing to collect the massive cashflow until the value increases. 

    6)If It’s only worth $380k to you, offer that. Honestly I wouldn’t be surprised if they don’t answer that one either. Usually a seller would counter with a $5-$10k discount if they took your offer seriously, they didn’t. At least you’d know you didn’t lose out by only $30k.  

    Good luck. 

Join the conversationCreate a free account to reply, vote on answers and follow this thread.