Real Estate Agent · Saint Petersburg · Member since 2017 · 45 posts · 41 votes
Hey BP,
I am negotiating on a 4-plex where the seller is asking 319K and I need to get it to at least 280-290K to start making sense.
I was amazed to find out that he paid 64K for it in 2013. Factoring in 6 years worth of cash flow, this guy is making an easy 500-600% on his 64K. I am aware that this is irrelevant but makes me feel better about being more aggressive.
Is it considered offensive to mention anything regarding a seller's purchase price or profits in a negotiation?
I probably wouldn't bother mentioning it. They know what they paid for it and they should know that you would be able to look that up as an agent. I would focus much more on the income, the comps, and the cost of repairs.
Do you expect it to need a lot of repairs?
Is there any upside potential in the rents?
Some sellers are just stubborn and you have to let the market season them a bit.
Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes
7y
There's no upside to mentioning it. Most likely he will get offended and be harder to deal with. There is no scenario that the seller will lower his price because you mention it.
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
7y
Focus on your representation and do not get carried away with someone else's business. Just about every other sites now list past sale history as public domain information.
Contractor · Oxford, MA · Member since 2018 · 807 posts · 745 votes
7y
@Joe Ferguson their profits are none of your business and you have no clue what they put into the building. They could have put 300k in work into the place for all you know. In the end, give them an offer that works with your numbers and if they can sell it for more to someone else, good for them. They have no obligation to give someone else a deal and hand them money because they made a good investment. If you think otherwise, go find someone to sell you Amazon stock at 2013 prices.
Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
7y
@Joe Ferguson what it's worth now has nothing to do with what he paid for it so I dont think it would be a good negotiating tool. I'd focus more on deferred maintenance items or capex items near the end of their useful lives.
Real Estate Agent · Saint Petersburg · Member since 2017 · 45 posts · 41 votes
7y
Thanks for the replies. I pretty much knew this answer as evident by me saying "I am aware this is irrelevant".
Funny thing is, we had a super casual conversation and it did come up. He was talking about his successes and I jokingly asked if he was accepting students... Me: "because as you know its not hard to know what you paid and I would love to replicate those results".
FYI, we settled at 295K and I am under contract on my first house hack! Woooo!
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
7y
@Joe Ferguson I find lots of houses that sold for zero dollars. Does that mean they got a screaming deal? Probably means they inherited it. I mean there’s so many things going on that you may not even consider