Repairs added to sales price

5 Replies

Good evening BP community! 

I'm running into somewhat of a dilemma while making an offer on a SFH and wanted to throw it out to the community.

Essentially, my agent and I valued a property (based on comps and psft) to arrive at a particular range. The seller has the property listed significantly higher than the assessed value thus, I submitted an offer within the range of what I think is fair and within reason of the market. Typically, when I underbid on a property, I'll always submit a letter that explains the reason and factors why my offer is low in an attempt to not offend the selling party. However, the seller countered with a higher (yet lower than the original listed price) offer based on the notion that they need to complete repairs to the house in order for property to pass inspection.

Therefore, I'm curious to see if anyone has experienced this situation before and/or has a professional opinion.  In my opinion, the market value is the market value and if the seller needs to make repairs to pass inspection than the seller is merely updating the house to reach market value not adding value to the house.  This is probably the exact reason that the property has been listed for >90 days.

Look forward to your feedback.

Your right, that’s the reason it’s been listed for so long. They are asking for more than the market says its worth. It doesn't matter to you if they need to repair it or whatever any of their reasoning is that they feel justifies their asking price. It also appears to not matter to them what your justification is for the low offer. It comes down to market pricing and options. If it was a good deal for what it is, it would sell. If not, people buy elsewhere. Consider telling them to keep you in mind, or maybe apply wholesaler techniques, as wholesalers can come up with creative options sometimes to help bump them over the selling edge. What do they need? Can you do a cash offer so they don’t need to fix it and get a better deal and then refinance? Can you offer to rent it back to them if they need time to move? Can you offer the higher price and ask for something of value in return that will make it worth it to you? It may be likely you will need to move on if all of the counter offers have been exhausted.

Bottom line is, you offer what you think is fair.  Sales are a negotiation.  Some sellers are insane and not realistic or are simply hoping that there will be a buyer who is a complete idiot.

So, stick to what you know to be a fair offer and don't be conned into offering more than you're truly willing to pay.  Don't get sucked into the auctioneer situation where buyers get sucked into bidding higher than they intended to bid.

There are lots and lots of properties out there.  It may be a disappointment not to get the one you had in mind, but don't get conned into bidding higher than you should.  Wait for the next one.  It will definitely come along.  If you go into negotiations knowing that there will be another property down the road, you'll be in a stronger position.  Good luck.

Did they simply misunderstand and think that they need to make the repairs?  Simply explain that you offered (making up numbers) $150K based on the fact that you need to make $40K in repairs.  You will pay the $150K and do the repairs yourself, you don't want them to do the repairs.

I'm with Theresa on this. I'm assuming your offer is based upon how the property currently is, and not what it could be. If that's the case, and he is making repairs, then I would expect the price to go up. But that's all in negotiations. I've done both. Offered "as is" value. Offered "if you make these upgrades" value. The funny thing is, many times it works for me if they make certain repairs and I pay value for that, as I can then roll those costs into the mortgage rather than pay them out of pocket after close.