Dealing with a difficult seller... or am I the problem?

18 Replies

Just wanted to share my current situation and hopefully get some input.

In 2017 I purchased a 4-plex building.  It shares a driveway with a sister building next door (the buildings & lot are exactly the same). The owner of next door is a major slum lord, no repairs to the building, overcharges for rent, usually 50% of the tenants are drug dealers. They refuse to pay for any shared expenses (snow removal, driveway repair).  One of their tenants uses my lawn mower to do the yard because they will not pay for yard work or provide a lawn mower.

I paid $470,000 for my property which was the going rate at the time.  Constructed in about 1970, building in OK condition.  Newer replacement windows, new exterior doors (originally the building used hollow core interior doors with a screen door as the exterior).

I approached the owner of next door sometime in 2019 to see if they would be interested in selling.  They said yes, they would be interested and wanted $600,00 - $650,000 and to make them an offer.  I made them an offer and 3 days later they came back and said they now wanted $800,000.  I would need to send them an offer, along with $50,000, no inspection of the property permitted.

That price was way out of line with the market, even his $600k was high.  I should mention these buildings are in a D neighborhood.  In fact it is the worst street in the city.  I pulled a bunch of comps and provided them to the owner.  He said thanks, but it is not right for me to be insulting his building.  Do not speak to any of my tenants and hung up.

Now advance to January 2021 and the property hits the MLS, with an asking price of $850,000. Again, his price is totally unreasonable, considering the location & condition. The building needs all new windows & doors and has a massive mold problem. I have not been in the attic but from photos and knowledge of my own building there is not enough insulation in the attic which has caused mold to form from heat transfer through the ceiling. The mold is showing through the ceiling, known as ghosting, black mold has grown all over the ceiling edges and down the walls. No one should really be living in there, I think the city could condemn if they were aware of it.

They have attempted to 'repair' it by skim coating over parts of the ceiling and painting over it, of course it just grows right through because they are trying to hide it and not fix it.

After 6 months and no sale, they drop their MLS ask price to $749,000.

I contact my agent at the start of Sept and said I would be a buyer at $600,000.  He attempts to contact the listing agent, the agent will not speak to him via phone - only text, which makes communication difficult.

The listing agent (who is also the property manager) said they have an offer, with subject removals coming off on Sept. 10th.

So I sit and wait to see if the deal closes on the 10th.  11th passes, 12th passes - still listed.  On the 14th I see what appears to be a group of 4 coming to view the property.  I get my agent to contact the selling agent to see what is going on.

The buyers could not get the subjects removed on the 10th, so they gave them an extension to Sept. 25th.  He asked why they did not contact him, knowing he has an offer.  She stated she must do what is best for her client (speaking to potential buyers might help her client!).

I asked to put in a backup offer, if I could get it accepted that should prevent them from giving the other buyer another extension if they can't get their subjects removed.

Finally on Sept. 22 I submitted my backup offer.  Very clean, at least I think so.

* No inspection (I already know it is full of mold) and all units need full remodels.

* No financing condition

* Was requesting vacant possession of unit A in the building, which would require them to do an eviction of the tenant on grounds that I would be owner occupied.  Totally legal here, but would take from 2 - 6 months if the tenant files a dispute with the rental board.

* My offer was for $650,000

I did not think they would actually take the offer at that price, but was hoping they would counter.

Their reply came back - NO, no counter and mentioned they would not do the eviction for owner possession either.

The buyer in 1st position should have their subjects removed by Saturday the 25th.

I will submit a revised offer of $700,000 on Friday 24th, so at least they know there is someone who is genuinely interested and hopefully they will counter with something.

I believe the building needs $200,000 in work to restore it to about the same condition as my building. That would make the ARV $900,000 which is so far above market it is not even funny.

One advantage for me to own both properties is the potential to build additional units on the combined property, that would be a long term thing but there is plenty of space between the two lots to add another 4 - 6 unit building.

Any suggestions on how I should deal with this seller/agent?

Reading over what I have just written, the answer is clear - I should just walk away from this deal - it is not a good deal.

Originally posted by @Steve K. :

You should let them fall out of contract several times, then make a blood-sucking offer. 

This is apparently the 2nd buyer that is attempting to buy the place, as some other investor contacted them when it was first listed at $850k.  He was told they had a couple of offers but they fell through.  Of course, I assume the selling agent is lying anyway.

If someone has to finance this property, I think the banks will turn them down after they get an inspection (if the seller lets them do an inspection).  In the listing it states the owner is not aware of building condition, selling AS-IS.  That is a dead give away they are well aware of the problems.

@Robert Gunther , seems like you've become emotionally attached to buying this property.  I understand ease of scaling the business with the properties literally being next door, but you said yourself everything he wants is not in line with the market.

I agree with @Steve K. , you should let it linger for longer and then make another offer, but be prepared to be turned down.  They may not need to sell, and just want to hit a certain number.

It sounds like you could make some money on your building - why not just sell yours instead and go into a better situation? If they have their crappy building up for $750, put yours up for $800 or $850 and let the potential buyers - who are going to see their building - see how much nicer yours is for not much more money. 

Why would you increase your price from $650K to $700K?  Tell them the offer is there with an end date and state that they seem to be having problems getting an offer to stick due to the condition of the building and the price.

You're surprised someone doesnt want to bother countering an offer $100k below current list, after theyve already dropped the price $100k? 

It appears that you want to buy it more than the seller wants to sell it. As a therapy you might want to look at other apartments while you’re waiting on the seller to come your way. That should help you become less emotionally attached to what you described as a bad building. Of course if it’s such a bad building why do you want it so bad?

@Robert Gunther overpaying for a property on the worst street in the city seems like a big mistake. Now is the time to SELL properties in the worst locations. 

I can guess why your offer was rejected. They are currently under contract for a higher price with no stipulation to evict a tenant. Why would they accept a worse offer?

I believe your claim that the property is overpriced and run down, but market value is determined by what a buyer is willing to pay. It is not based on what you are willing to pay. You have far more knowledge of the challenges facing that property than a typical buyer. 

Here is what I would do. I would rescind the offer right away. HOPE that the current offer goes through. The best thing that could happen is getting a new owner of that property. Hopefully they will be easier to work with and willing to improve the property. 

Rescinding your offer doesn't mean you can't still come to terms buying the property, if the current deal falls through. It does put you in a power position, because the seller needs to come to you. There is actually a known negotiation tactic to reduce offer when the other party is trying to go higher. Simply tell the sellers agent, I am interested in the property but realized after running numbers again that my offer was too high for the condition of the property. Odds are good the lazy owner will never do an eviction, so that needs to come off the table. Take the price down to account for the hassle.

I understand the aspect of being able to put a 4-6 plex on the two combined properties, but maybe you can still put a duplex on your single property. Ultimately having someone else deal with fixing up that property is better for you. Let them dump $200K into the property, then list yours on the market for $900K. As I said, this market is the time to sell properties in bad locations, not buy them.

Originally posted by @Robert Gunther :

Just wanted to share my current situation and hopefully get some input.

In 2017 I purchased a 4-plex building.  It shares a driveway with a sister building next door (the buildings & lot are exactly the same). The owner of next door is a major slum lord, no repairs to the building, overcharges for rent, usually 50% of the tenants are drug dealers. They refuse to pay for any shared expenses (snow removal, driveway repair).  One of their tenants uses my lawn mower to do the yard because they will not pay for yard work or provide a lawn mower.

I paid $470,000 for my property which was the going rate at the time.  Constructed in about 1970, building in OK condition.  Newer replacement windows, new exterior doors (originally the building used hollow core interior doors with a screen door as the exterior).

I approached the owner of next door sometime in 2019 to see if they would be interested in selling.  They said yes, they would be interested and wanted $600,00 - $650,000 and to make them an offer.  I made them an offer and 3 days later they came back and said they now wanted $800,000.  I would need to send them an offer, along with $50,000, no inspection of the property permitted.

That price was way out of line with the market, even his $600k was high.  I should mention these buildings are in a D neighborhood.  In fact it is the worst street in the city.  I pulled a bunch of comps and provided them to the owner.  He said thanks, but it is not right for me to be insulting his building.  Do not speak to any of my tenants and hung up.

Now advance to January 2021 and the property hits the MLS, with an asking price of $850,000. Again, his price is totally unreasonable, considering the location & condition. The building needs all new windows & doors and has a massive mold problem. I have not been in the attic but from photos and knowledge of my own building there is not enough insulation in the attic which has caused mold to form from heat transfer through the ceiling. The mold is showing through the ceiling, known as ghosting, black mold has grown all over the ceiling edges and down the walls. No one should really be living in there, I think the city could condemn if they were aware of it.

They have attempted to 'repair' it by skim coating over parts of the ceiling and painting over it, of course it just grows right through because they are trying to hide it and not fix it.

After 6 months and no sale, they drop their MLS ask price to $749,000.

I contact my agent at the start of Sept and said I would be a buyer at $600,000.  He attempts to contact the listing agent, the agent will not speak to him via phone - only text, which makes communication difficult.

The listing agent (who is also the property manager) said they have an offer, with subject removals coming off on Sept. 10th.

So I sit and wait to see if the deal closes on the 10th.  11th passes, 12th passes - still listed.  On the 14th I see what appears to be a group of 4 coming to view the property.  I get my agent to contact the selling agent to see what is going on.

The buyers could not get the subjects removed on the 10th, so they gave them an extension to Sept. 25th.  He asked why they did not contact him, knowing he has an offer.  She stated she must do what is best for her client (speaking to potential buyers might help her client!).

I asked to put in a backup offer, if I could get it accepted that should prevent them from giving the other buyer another extension if they can't get their subjects removed.

Finally on Sept. 22 I submitted my backup offer.  Very clean, at least I think so.

* No inspection (I already know it is full of mold) and all units need full remodels.

* No financing condition

* Was requesting vacant possession of unit A in the building, which would require them to do an eviction of the tenant on grounds that I would be owner occupied.  Totally legal here, but would take from 2 - 6 months if the tenant files a dispute with the rental board.

* My offer was for $650,000

I did not think they would actually take the offer at that price, but was hoping they would counter.

Their reply came back - NO, no counter and mentioned they would not do the eviction for owner possession either.

The buyer in 1st position should have their subjects removed by Saturday the 25th.

I will submit a revised offer of $700,000 on Friday 24th, so at least they know there is someone who is genuinely interested and hopefully they will counter with something.

I believe the building needs $200,000 in work to restore it to about the same condition as my building. That would make the ARV $900,000 which is so far above market it is not even funny.

One advantage for me to own both properties is the potential to build additional units on the combined property, that would be a long term thing but there is plenty of space between the two lots to add another 4 - 6 unit building.

Any suggestions on how I should deal with this seller/agent?

Reading over what I have just written, the answer is clear - I should just walk away from this deal - it is not a good deal.

 Christ bro, why are you in your head so much?

  • They want to sell it at X
  • You want to buy it at Y

If X and Y ain't the same number than it's not happening. So they either gotta come down in price or you gotta come up. It's that simple. If they get other offer maybe they don't gotta come down. If they don't get other offers maybe they will come down or maybe they don't get other offers and they just keep it. Time will tell.

Originally posted by @Scott Mac :

Run down (Slum) 4 plexes go for $600,000 WOW.

Do you know how many SFH's you could get in Detroit for that--Just WOW.

 In San Diego $600K may be able to buy a very run down, very small duplex, on a poor street or a fairly small single family home in OK shape.  

In San Francisco it could possibly buy a studio condo.

Location, location, location.

Why not report their property to the city, stating it is damaging the value of your property?

Originally posted by @Scott Mac :

Run down (Slum) 4 plexes go for $600,000 WOW.

Do you know how many SFH's you could get in Detroit for that--Just WOW.

Kelowna is lower BC mainland on Lake Okanagan also basically the warmest area of all of Canada along with a huge retirement mecca,  tons of great golf wineries  fruit orchards  Big white ski mtn 35 mtns  the lake it self is about 50 miles long and great for boating and recreation deep blue water. then the mtns are loaded with fishing lakes its really quite the place and this is big for semi Rural BC LOTS of medical.. I liked it so much on a short vacation trip up there in 2000 I bought a home on the Okanagan golf course.. there has been massive appreciation in that market since then.   And when he says D area keep that in perspective its just older its not D like  Detroit. :)  Google it  fantastic place really. 

Originally posted by @Russell Brazil :

You're surprised someone doesnt want to bother countering an offer $100k below current list, after theyve already dropped the price $100k?

Kelowna market is as robust as Vancouver  Toronto Calgary etc etc.. U would have to see it to understand . Property was very well priced when i bought there in 2000 and with the exchange rate great deals but since then its just exploded and there are a few very big landlords there that own / dominate the rental property market and own 100s of million if not billion in rentals. 

@Robert Gunther

Yeah just kinda how it goes.

Real estate is just a supply and demand - and what is a buyer and seller able to work out.

The supply and demand part I feel is pretty obvious.

However the what is a seller and buyer willing to work out - is simply who has the Leverage.

If a seller is unmotivated, all a buyer can do is make an offer that the seller will accept. Often times, there really isn’t much rationale to it. If they don’t want to accept the offer - they don’t have to.

If a seller wants to sell their property - then they need to accept an offer a buyer is willing to make.

Thanks for all the input to my comments.

Thought I would post an update.

I did not revise my offer, they did (after 260ish days) sell the property at full ask of $749,900.  I do not know who bought it yet or when they take possession.

I did end up buying a different property, a 3/plex with 3 beds & 1.5 baths with each unit being about 1,000 sq ft.

I'm happy with the outcome, the big advantage with the place I ended up buying:

1) Units are side-by-side not up/down so less noise transfer between units

2) MUCH better area


Hopefully the new owners next door take care of the property and fix it up and improve the quality of the tenants.  I have had problems renting in the past because of how trashy the house next door is.  The way the buildings are on the lot, the tenants of both buildings look across at each other.  When the house next door has a bunch of crap all over the yard, it turns potential tenants off.

Originally posted by @Robert Gunther :

Thanks for all the input to my comments.

Thought I would post an update.

I did not revise my offer, they did (after 260ish days) sell the property at full ask of $749,900.  I do not know who bought it yet or when they take possession.

I did end up buying a different property, a 3/plex with 3 beds & 1.5 baths with each unit being about 1,000 sq ft.

I'm happy with the outcome, the big advantage with the place I ended up buying:

1) Units are side-by-side not up/down so less noise transfer between units

2) MUCH better area


Hopefully the new owners next door take care of the property and fix it up and improve the quality of the tenants.  I have had problems renting in the past because of how trashy the house next door is.  The way the buildings are on the lot, the tenants of both buildings look across at each other.  When the house next door has a bunch of crap all over the yard, it turns potential tenants off.

Congratulations on your new purchase. Good job on not waiting around for someone that did not want to work with you.