What's the best way to structure this offer?
I live in a pretty sought-after town just outside of Topeka, Ks (Silver Lake).
Here in Silver Lake, houses rarely hit the market and regularly sell for more than asking price.
I was made aware of a house that is not on the market.
The seller goes to church with me. My father-in-law brought the deal to me and walked through the house with us originally.
The county appraises it at about $151k (in this market, I'm confident after rehab, it can sell for around $160k or more). I have a little bit of insider knowledge on the house and (I think) expected value.
The story goes like this : My father-in-law an elder at our church was sitting down at a church dinner with this fellow and the pastor and other elders. He stated that a RE agent was allowed to walk through (about a yr ago) and offered $60k for the house. The owner (politely, but firmly) asked the agent to leave. Through this discussion, around the table were quick offers thrown "don't sell it to him for $60, I'll give you $65", one said. "I'll give you $75" and it went up like that to about $85k.
My wife and I have walked through the house a couple of times and have figure that the house needs anywhere between $30k and $40k to rehab. (still aren't sure if we'll flip or hold).
I am trying to structure an offer that, both, makes our investment worth the return AND isn't offensive to this retired gentleman and his wife.
In most cases, I would simply make an offer, a hard anchor, and try to negotiate up to a mutually agreeable number. In this case, however, I don't think it to be the best decision. You see, this (retired) couple is very poor, owns the house outright and can barely afford the taxes on the property, as it sits. It is not my intention to get it for "as low as possible" and risk taking advantage of somebody in his position, knowingly. I would like him to benefit from this deal as well. But, it is also not my intention to lose money or work my butt off for a $5k profit...…
I would like to purchase the house for anywhere between $75k and $85k, but am looking for some pointers on how to come to that number together. I don't want to pay more than expected, but don't want to offer an offensively low number..
Thoughts?