Buying As-Is - Then Negotiating the deal.

21 Replies

I don't know where I heard this quote but it stuck with me...

Besides the laws of nature..Everything is negotiable in life.

Which brings me to my question...

I have a condo under contract that was a foreclosure and it is being sold as-is. 

I just came home from the inspection and had the thought run across my mind.. How can I try to lower the accepted price?

I'm not a seasoned negotiator or anything so I turned to BP to see what kind of skills have been tried before...

As for the inspection, a few things that stuck out... A/C calls for 20amp breaker..it has 30. Furnace needs cleaning and tune up..leaks small amount of monoxide. Small wet spot on ceiling from upper neighbors sink (Most likely)

Thanks in advance!

Some thoughts:

1) did you mean it needs 30 and has 20?  If so, that won't get you too far, it's a breaker and some wire ... that'll cost you about $100 total, including labor.

2) leaking even a little CO is bad news.  Best case: needs cleaned.  Worst case: heat exchanger is cracked, and you'll be better off just buying a new furnace.

3) That sounds like it could be another condo's issue.  You can buy it as-is and still stipulate that the originating issue be fixed.

Typically I make my offers with an inspection clause that gives me 14 days. I will not ask them to do any repairs. However I can use the inspection results to cancel the contract or renegotiate. 

Medium head icon colorRyan Dossey, Call Porter | http://Callporter.com

@Robert Obniski

 In my experience, your ability to negotiate a lower price is almost always directly proportional to the motivation of the seller.  If the seller is in a strong position and they know it, you won't likely get them to come down much even if the condo is in really poor condition.  On the other hand, if they're asking too much (and they know it) and there's not much activity, then you've got a better shot at talking them down with a long list of repairs. Remember that everything is only worth what someone is willing to pay.  Most people are smart enough to see through "salesman speak" so you're real leverage is in the details of the numbers on that project.  .....but it never hurts to ask for a discount..... Good luck!

@Ryan Dossey

Can you share what types of things you put in your contingency clauses that would get you out of the contract?

I'm rethinking how I approach looking at homes-2-length-of-time to put in a contract. Generally I can get out to look at the exterior if I do a drive by but can't get to the inside until I talk to my agent. I'm thinking I can just have her put in some clauses and just submit a contract if my drive by pans out.

Others in the BP forum suggest they do this and have an out in the contract for them to either do the paid inspection or just a walk though inspection themselves.

I really don't set myself up with "outs". My goal is to close everything I can. That being said I am not a contractor. So I have my regular guys walk through before closing. If they find an issue within the allotted time frame I am not canceling the deal. I am executing a contingency to terminate the contract. It's just a typical inspection contingency with a 7-14 days inspection period depending on how fast my contractors can get there. 

Medium head icon colorRyan Dossey, Call Porter | http://Callporter.com

Thanks everyone for the tips! 

I guess more of what im looking for is when something is being sold as is...what are some ways ask to lower the already accepted price?

I just did this last week. Used the inspection as negotiating power for a slight drop in price...and it worked!
Originally posted by @Joey Noel :
I just did this last week. Used the inspection as negotiating power for a slight drop in price...and it worked!

 Can you go into more detail?

@Ryan Dossey

 "not canceling the deal" and "executing contingency to terminate the contract"

If you're not canceling the deal but executing contingency to terminate - are you not "canceling the deal"?

Sorry but I'm confused at what you wrote.

@Robert Obniski

 You simply ask for a price reduction.  A bank doesn't care what your logic is, and won't be affected by it.  They'll either lower it, or they won't.

It comes down to legal speak. You don't want to say "hey I'm using my out". That sounds like you never intended to actually close. You want to make sure it's worded in a way that you have no further obligations in regards to your offer. You are not defaulting but terminating the offer altogether. 

Cancelling the deal sounds very "Yeah I woke up and decided to not to close"

Where as terminating for your provided contingency is your right.

Medium head icon colorRyan Dossey, Call Porter | http://Callporter.com

@Robert Obniski The inspection issues you mentioned are extremely minor and are unlikely to get you much of a  concession.  You really should do your negotiation with the original purchase price and not plan before hand to use the inspection as a cudgel.

This is simple:

"As for the inspection, a few things that stuck out... A/C calls for 20amp breaker..it has 30".

Ask seller to replace breaker - DIY less than $10.00.  If your (or the seller) are not comfortable shutting off the main breaker and switching call an electrician.  Cost perhaps $150.00 

"Furnace needs cleaning and tune up..leaks small amount of monoxide"

If the home inspector can't advise you regarding the safety of the furnace you might want to hire a qualified HVAC technician.  I don't think you want to expose a future tenant to a "small amount of monoxide".  However you might want to check out this link.

http://carbonmonoxidemyths.com/myth-1.php

Either way you could ask the owner to pay all or part of the cost of  a new furnace.  Worst that could happen is he'd say no.

Originally posted by @Joey Noel :
I just did this last week. Used the inspection as negotiating power for a slight drop in price...and it worked!

 Can you elaborate?

@Daria B. @Robert Obniski  I basically was interested to buy a property as is with plans to renovate.  After the inspection we found it needed more structural repairs then expected and had a flooded basement.  We asked for them to pump out the water and for a lower purchase as the rehab would be more then expected.  They agreed and lowered it a bit.  This was all amended to the contract.  

If the wiring and plug for the ac circuit are properly sized then the 30amp breaker is a non-issue. 

If it has wiring for a 20amp circuit but a 30amp breaker it violates code.

It's most likely fine. If the inspector knew what he was doing he would have caught the under sized wiring.

Originally posted by @Joey Noel :

@Daria B. @Robert Obniski  I basically was interested to buy a property as is with plans to renovate.  After the inspection we found it needed more structural repairs then expected and had a flooded basement.  We asked for them to pump out the water and for a lower purchase as the rehab would be more then expected.  They agreed and lowered it a bit.  This was all amended to the contract.  

 Ok thanks. I made an offer on an "as is" to a buyer - not foreclosure - and I'd like to find what other people have encountered when asking for a reduction. I always thought "as is" was "as is".

Thanks again...

@Daria B.  I think everything is negotiable but generally speaking I'm sure most people that sell "as is" expect to sell it "as is."  But that doesn't mean I can change my mind after the inspection.  Just as long as the sale is contingent upon inspection and that is outlined in your contract.  

Originally posted by @Joey Noel :

@Daria B.  I think everything is negotiable but generally speaking I'm sure most people that sell "as is" expect to sell it "as is."  But that doesn't mean I can change my mind after the inspection.  Just as long as the sale is contingent upon inspection and that is outlined in your contract.  

My thoughts are some times I think "some" things are not negotiable. A good way to look at it is "everything" is negotiable until someone says it isn't. :) That's my approach now as I'm learning.

When I submit my contracts I do make sure the 2 most contingent statements are "financial" and "inspection". This is my 1st "as is" so the contract had verbiage for the "as is" parts still including right of inspection and coverage for what the inspection may bring back. Like you said, you can change your mind after the inspection based on the inspection.

If it is bank-owned your options are most likely to walk or pay the negotiated price.  If it is an individual seller, you may have a little more flexibility.

In either case I would try to get specialists to take a look at the issues before closing.  I think a company that does HVAC could give you details on correcting the CO issue and a rough idea of the electrical work required.  Maybe the agent can help you with ensuring the leak in the upstairs unit has been addressed.

@Wayne Brooks is spot on.

To a bank there is absolutely no emotion involved.  Everything is numbers to them. Ask them for what you want (they will likely say no) and move on.

You are buying a foreclosure.  Was your inspection for informational purposes only?

Medium rzt hc 6483Michael Noto, SalCal Real Estate Connections | [email protected] | 860‑384‑7570 | https://www.zillow.com/profile/Mike-Noto/

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