I was casually in negotiations on a duplex. The seller is willing to owner finance. He and his agent and me and my agent have never done an owner finance. Which seems fairly simple enough. At the last minute the seller had his realtor tell us he didnt want to sell any longer. I had the feeling like there was more to the sell than money so I called the realtor and asked permission to contact him personally so he and I can discuss what is goals and wants are. So I have a meeting in a few hours to discuss how we can negotiate the terms so they are mutually beneficial for all parties involved, which includes two long term tenants who are paying below market rent values. I can pay him asking price but I would need to raise the rent 38% which will force the current tenants to move out. I feel like they can handle 15% rent increase and would be willing to stay and be able to afford that. Realistically rent should be raised a solid 23% to be current in my specific market/area.
Any suggestions, tips, or ideas is greatly appreciated. I know the seller doesnt need the money and is also concerned for his long term tenants well being. As I am interested in keeping long term established good paying tenants even if I leave a little meat on the bone...
Zac, love the dog...and to the issue at hand, start over. Even further back than that.
Start with you. If the current rents are the problem based on the sales price, tackle that intellectually first with yourself. What would happen if you agreed to the sales price but you acquired the property vacant at closing? Would the seller be willing to "cash for keys" the tenants to have them early terminate their leases - or by another method? Solve your problem in your head before you meet; there are more options than re-negotiating the price. And, if you make it about price, you lose.
The conversation. I recommend starting off by thanking him for meeting with you, that you appreciate the process that you both went through on the property, and that you wanted to learn more about the negotiations first hand from his perspective. Then ask questions and listen...it's his perspective so don't try to change his mind. Listen. Ask why he decided not to sell. Ask how the ROI from the sale and seller financing compares to what the ROI is now as a rental. Ask if there is one term/condition that could be renegotiated to put the sale back on track. After you've heard him out fully, then offer your new & improve perspective.
Now you. Ask about acquiring the property without the tenants. There are two realtors involved here who can offer their services to the tenants. If he flat out doesn't want to sell, ask if you can contact him again in 60 days to check-in and revisit the topic again. Leave the door open even if you decide not to walk through it again.
From what you posted, could it be that he was uncomfortable doing the seller financing since it was a first for him? (It's a big deal; he probably needs to talk to an attorney). Could it be that the realtors over-nagged the rents to the seller (nothing like telling the owner that he's not charging enough rent?). Did it appear to him that you were wanting everything - a lower price, higher rent price, him to carry the financing - and in the end, it was too much of a good thing for you? (You need to know how the ROI from the sale compares to the one he has now; he will walk away from the sale with a Promissory Note...not a big check).
Hope this helps. I know time is of the essence since your meeting is looming so I'm just giving you top of mind. Fingers crossed for you.
Thanks Patricia! Great feedback and suggestions I did not think of as of yet. Thanks again!!