How do you negotiate with a seller with unreasonable price?

15 Replies

Seller is motivated, but the property needs a lot of work. Previous tenant trashed the place. She does not want anything lower than what she paid for 12 yrs ago. 

Easy answer - walk away. You need to hit your number, not the other way around.

Not-so-easy answer - see if there are creative ways to make a deal happen. E.g., your sale price, but she can hold a note on the property. Maybe an all-cash offer would entice her. I believe every deal is made by meeting some percentage of needs on both sides. Have your agent have an earnest conversation if the price is unrealistic -- how can we make a deal work at your price, not hers?

Originally posted by @John Fider :

Seller is motivated, but the property needs a lot of work. Previous tenant trashed the place. She does not want anything lower than what she paid for 12 yrs ago. 

Try offering terms. If that does not work you probably need to walk. 

Sounds like she isn't motivated enough. Show her why your offer makes sense. If it doesn't work you'll have to move on. She may call back, unless someone else overpays. 

As an agent or as a buyer?

As an agent, give them an honest valuation and list it. Hopefully you get some offers that will demonstrate your price is where it needs to be. Have monthly talks about what the feedback is.

As a buyer, Give them a solid real world value and give them a "Life of offer" long enough that they think about it  (while they sleep and imagine what that money will pay off). You may be the only one who puts an offer in. They will ignore it for a couple weeks. When nothing else shows up they may call you. If so (Big point). Take your offered price, stand firm and let them get it. I "always" see. Well my low offer didn't take, so now it's even lower. The deal never works.

If you offer 75% and they say no for a month (and you know your number is good). Take it when they come back! If not they will do a price drop to 85% and you are no longer the only game in town. 

Just my 2 cents and good luck!

I am a huge fan of following up on properties like this after they've sat for awhile. Case in point, I'm under contract for a quad where the owner wanted 150, but I wasn't willing to go above 110. Over the course of 6 months, I watched the property empty out and sit idle. The lawn was overgrown and windows were starting to get smashed in. I waited for the property to become a headache and then offered 105. Seller accepted. 

If you're looking to buy this personally, make the offer that works for you, and let the seller know it's good until you rescind it. Follow up every month or so until it is sold to someone else or she accepts your offer.

I would buy many properties in my market at 2008 prices without hesitation, even if they were "trashed". I guess it depends on what you mean by trashed, but it is amazing what patching holes, painting and replacing flooring will do. It also depends on the market and how much it has appreciated since 2008. 

As others said, pick the price that works for you. It doesn't matter what she paid for it. 

After repair value - profit - rehab cost = offer price

@John Fider just let her know you have to bring it up to 2020 standards and let her know what the cost will be. Ask her how does she recommend you accomplish that at her price point? I try to have them verbalize their irrational offer request and understand that it won't be profitable at their price. At the end of the day, stick to your numbers and know you are one step closer to your next deal!

You've had several people make the good suggestion of making an offer that works for you and then giving a fairly long validity period. I usually say "the offer is good until/unless I buy something else".

On several occasions when making lower offers on things I tell the seller, you could probably do such and such and get more money but this is how much I'm willing to pay for it.

It's surprising how many times I get a call later.

Lots of good suggestions, and there’s always more fish in the sea if you can’t pull one together. 
Big thing not mentioned enough is the terms. The price is half the battle, and not even as important if that's all they're stuck on. I bought a piece of land once for "their" price, and "my" terms, which was low down, low monthly, and no interest. Didn't mind paying their price at all.

With her price can you assume the mortgage or take it subject to? Can you do a sandwich lease option and make it work?

I have said many times explaining to new investors the importance of terms over price: “I will buy any property at any price if I name the terms.”

  Toxic waste dump for a million dollars? Perfect! Zero down, large negative interest rate. 
Sometimes the terms could be they pay me! If the price sucks, think about what terms could make it a win!

@John Fider

Get an idea of what she might want/ value (seller finance, X amount of cash for something immediate, etc) and change terms but not necessarily price. Otherwise, it’s ok to move on and keep it cordial. We’ve had multiple properties come back to us weeks or months later after they realized their price was too high. Good luck!

@John Fider what have you put together for her? What was your approach when you walked through the property? I have found that people want to be led instead of told. As an Agent I dealt with distressed Sellers, I never told them outright that their house was in rough shape instead I showed them what other properties that recently sold looked like & I asked them to compare for themselves. There are people that are unreasonable, but that is something thay cannot be changed... more times than not people realize and accept reasonable arguments when presented with objective evidence.