Buying a rental property from owner in TN

3 Replies

Hello BP,

I'd like to reach out for some advice on making an offer, first time and I want to understand the process.

I came across a great listing on Redfin, the owner (who is also the agent) is selling his rental property and the numbers look solid. Seems like a great find, but it's been on the market for about 3 months. I asked the owner why he thinks that is, and he's saying he listed too high but just lowered and now there's a lot more interest. 

I'm considering not using an agent since I already have the house in mind, and I believe I can negotiate a lower price due to saving the seller a 2.5% agent fee? Is this true?

I'm thinking these are the steps, let me know if I'm leaving anything vital out.

1.) I'll contact seller through email, make an offer. We'll eventually settle on a price.

2.) I'll work with a lawyer to view seller's contract.

3.) My lender will send for an appraisal.

4.) I'll have the inspection done.

Missing any big steps? 

Thanks in advanced. 

Ryan

Hi Ryan,

The following is conjecture, guesswork, since I don't know the details.  

Yes, you can negotiate a lower price.  Be direct "since I'm not using a buyer's agent I automatically expect ____% of the price".  

Since he's an agent he'll be familiar with the local disclosures and have access to the local board approved contract.  Ask him to use that contract and he/she should automatically provide the needed disclosures.  

It's not a bad idea to have an attorney or an agent to look over the contract.  Even though the state approved contract is intended to be consumer friendly it is still easy for a person experienced in real estate to take advantage of someone who isn't.  

Yes, your lender will order the appraisal.  

It's a good idea to have a professional inspection performed.  Make sure the terms of your contract give you an out if you find something you don't like.

There is no shame in using a buyer's agent until you become comfortable with the process.  

@Ryan Alexander a buyer's agent doesn't cost YOU anything. They are paid by the Seller but will protect your interests. They can evaluate the properties and determine whether they are priced right. If you hire a good one, they will be experts at negotiating on your behalf and walking you through your due diligence to ensure you're not missing something.

For all you know, this agent is the used-car-salesman type that can talk the talk while pulling the wool over your eyes. I'd rather pay a little more and be protected.

Besides, as @Brett K. pointed out, not using an agent is no guarantee the seller will drop the price!

Thank you guys. I ended up making the offer later last night before receiving your responses. I did bring up saving him money on not paying an agent's fee and he verbally accepted my offer. When I receive the contract, I'll have an attorney look it over. I'll make sure the terms of the contract give me an out if I find something during inspection. 

Thank you for your responses!

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