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Updated almost 9 years ago on . Most recent reply

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Jeremy Dugal
  • Investor
  • Presque Isle, ME
7
Votes |
25
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Letter Explaining Actual Value once Negotiations Have Failed

Jeremy Dugal
  • Investor
  • Presque Isle, ME
Posted

Hello.  I was recently in talks to purchase a three unit building in Maine.  Original asking price is $110,000.  Owner dropped price to $83,000 after approx. 9 mos on market.  The owner is the son of the deceased previous owner and I think has emotional ties to the house but knows nothing about investment value.  His final non-negotiable offer is $73,000.  It is a nice big building but has lots of deferred maintenance and would need at least $8-9000 cosmetically to get it rent ready for quality tenants.  He has recently gotten rid of all tenants as well because he has no interest in land-lording so the building is vacant.  

With all operating expenses and debt included this building would net about $110 per door at a $63000 price point and this is as high as I am willing to go and what I think its worth.  This is without all the cap ex.

I am thinking of sending a letter to the realtor and ultimately to the seller declining the final offer and breaking down the numbers for them and explaining why its only worth what its worth. The problem is I don't want to be insulting to the owner or the realtor who seem to have no idea how to price a property like this.  I live in a small town in Maine with not many multi-families for sale and I don't want to burn any bridges.

Has anyone had any success doing this and is there a way to do it without offending all parties involved.  Thanks in advance.  

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17,503
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Russell Brazil
  • Real Estate Agent
  • Washington, D.C.
30,217
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17,503
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Russell Brazil
  • Real Estate Agent
  • Washington, D.C.
ModeratorReplied

I kind of laugh when I get a letter from an investor telling me my property is priced too high, and I think most agents feel the same way. If it is in actuality priced to high, the listing agent is already aware of that fact. ....so they dont need you pointing that out. Agents actually want to sell the property, so we dont want the property overpriced. If it is not priced too high, then you will just look like you dont know what you are talking about. Either way I dont see it helping.

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