How to negotiate a seller’s price down

Question

I’m a bit of a newbie….

I’m in contract on a property and have already completed the inspection. There are several things that need to be done including the roof, foundation and deteriorated subfloor.

I’m asking for a $30k price adjustment but they only want to do $10K price adjustment.

I have already tried reducing to $25k and offer to cover closing costs.

Any suggestions on how to make the sellers more amicable or other advice to negotiate this offer?

Greg Scott · Answer

Remember, one solution is to walk away. In some cases that is the best decision.

If you haven't already, you should provide the seller a copy of your inspection reports. Once they have evidence of a problem, in most states, they are legally required to disclose this to future buyers. If this is new information, they won't have incentive to go search for a new buyer because they won't get a better price later.

If these defects are already baked into the price of the property, and the seller knows someone else would pay the full price, you don't have much leverage. Your choice would then be buy or walk away.

Brad Jacobson · Answer

I like to put myself in the seller's shoes. He or she received an offer from you for a certain amount and takes his or her property off market by accepting your offer. Then he or she has to take a $30,000 price reduction after expecting to receive what was offered. That's very frustrating for a seller because they either have to go back on market now after having lost a few weeks or sell the property for considerably less than planned.

As I buyer, I'd like to sympathize with their frustration and speak openly about how you expected the property to be in a certain condition when you walked through it but then were disappointed to later find things you did not notice up front. Own the misses on the initial walkthroughs and see if they'll be willing to work further with you. If not, it'd be best to walk quickly and allow them to get back on market and save yourself from getting into any trouble with disputed earnest money.

Good luck!

Maurice D. · Answer

Walk away. that's too much that's not factored in the price. Also, learn to spot these things when you first walk the property (Prior to an offer). Bring a contractor/roofer/foundation guy with you if you are serious about the house and serious about giving him repair work until you learn these things.

Key things to look at when buying a house is the roof/foundation/sewer/mechanicals/framing specially on older homes. How old is this property?

This way you present a lower initial offer based on conditions of the home and if they don't like the offer, you saved the inspection fee and the uphill battle for a price reduction.

Deanna O. · Answer

Put yourself in the seller's shoes is good advice. If they can turn around and sell it to someone else for their asking price is there any particular reason to sell to you? Would YOU sell it to you? Is there maybe something else that you can offer them in exchange for the lower price? Is there some way they could compensate or a higher price (ie carry they agree to carry the $30k as a small second TD at 0% for 3 years- - they get "their price", you get to do repairs with cheaper money). Can you do the sale faster/easier than another buyer, or accomplish something else they want? If it's a probate sale maybe you can rent until sold, for instance, in case it drags through the courts. If they want to spread the sale over 2 years for tax reasons, maybe agree to a high-rate, fixed-term note for part of it (nets them the same by spreading capital gains over more years, some of their gain is interest income vs capitol gains, etc). All this might be beyond "newbie" territory, but it's the give-and-take that can make things work.

As far as the implied threat to send the report to the seller, don't be the jerk you wouldn't want to deal with. It's not smart to poison the pond you plan to fish in later. Presumably this isn't the only RE deal you want to do, and there is a lot to be said for the good will of the local realtors.

For what it's worth, I've come across other posts on this site where newbies get all whiny because no one will sell them a property for 50% of FMV so they can get rich. Don't be that jerk either.

As far as the implied threat to send the report to the seller, don't be the jerk you wouldn't want to deal with. It's not smart to poison the pond you plan to fish in later. Presumably this isn't the only RE deal you want to do, and there is a lot to be said for the good will of the local realtors.

For what it's worth, I've come across other posts on this site where newbies get all whiny because no one will sell them a property for 50% of FMV so they can get rich. Don't be that jerk either.

Joe S. · Answer

Did you know about those items ahead of time and planned on renegotiating from the beginning?

Aharon Najafi · Answer

@Luciano A.

This property might still be a good deal.

Their counter is still $80k under market. I could eat the $30k but then that means no major upgrades. It also has the potential to subdivide and add a sfh or rezone for mfh.

There are still up sides to this deal. It’s not all bad but I think I’ll ask other realtors in the area about the inspection report sharing.

Manan Patel · Answer

Similar recent experience - I saw a duplex in the Renton WA. I love the location, however, the property needed lot of upgrades/remodeling. I hired an inspector to do pre-inspection and a contractor to give me an estimates. After considering all the upgrades, comps and, potential cash flow, my price came out to $100k less than what it was listed for. I put an offer knowing that it was unlikely the owner would accept it.

One thing to remember that it is still a seller's market. Additionally, as an individual you are competing against institutional cash offers. It is very to get carried away with the wind and buy it at the premium price. My suggestion is always do your due diligence and get best sense of what you are getting into. Given the market, you come up with the cap on how much premium you want to pay for the property (I usually keep $20k buffer) over your original offer. Anything beyond the buffer is no deal for my situation.

Luciano A. · Answer

@Aharon Najafi

You got some good pointers on here from others. What you have to ask yourself is the price you are buying it for at market value or less. If the seller has baked the price with the understanding it needs work then you have to take that under advisement. I have never heard a buyer cant send the inspection report to the seller. It sounds like your agent understands what that does to the seller and doesn't want to hurt his/her relationship with the seller's agent on future deals.

However, regardless of this. Did you get contractors to come out give you quotes on the roof, foundation, subfloor repairs? Sometimes these inspectors point out stuff just so they can justify their pricing. I would get independent bids from contractors for these items. If you get an honest contractor he might tell you the roof has another 4-5 years. Foundation is not as bad as it looks etc.

Don't walk away from a deal without hard facts not guesstimate from others, not in the trade. We all want lower than asking but sometimes the asking price is a great price.

Best of Luck

Theresa Harris · Answer

Then word it in a such a way that they ask for it. Tell them they are welcome to see the inspection report. In many places the inspector only provides a copy of the report to the buyer (not even their agent), but who the buyer shares it with is up to the buyer.

Sherief Elbassuoni · Answer

@Aharon Najafi, in a seller's market, it is not easy to convince the seller to take a big price cut.

You can try targetting properties that have been in the market for some time. You have better chance with these properties

How to negotiate a seller’s price down

How to negotiate a seller’s price down

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