Would you do seller concession on $900k quadplex?

Question

Trying to get into the mindset of a seller. You bought a house real cheap. Invested $200k into it and did top quality work. Then you try to sell it around $900k in an OK area, near some not so good areas. House is top quality and you know will command top rents. Sits on the market for 80 days with one deal failing to close.

Then interest rates start climbing up fast and stock market goes crazy. Buyers are getting nervous and some are already starting to get priced out of market. Market is well inflated too. So things are not looking good.

Then a buyer comes alone. High income, prequalified, but light on cash. They only have $55k, but will need $95k (including $20k reserve).

How would you feel about them asking for seller concession and how would that work? If you can make $40k disappear for the buyer, your house is sold and you possibly end up selling at the peak before the market possibly goes south.

And how would those numbers look like? $900k offer with $40k concession. What would be the loan? $940k? How does that work? Bank cuts check for $940? What money changes hands?

Orlando Goodon · Answer

What I was looking for is how do you think the seller looks at this? I feel they would be accommodating. Now is not the time to be sitting on a big quadplex that you invested a ton in, while interest rates rise. If I were the seller I would look at this like musical chairs. They have been going round and round with big dreams for big payday, but the music is starting to die. Don't want to get caught sitting on this property at a time when the market dries up, knowing some of these houses can take well over a year to sell. However, I'm the new guy here...so wanted to hear what others thought.

Kathy Utiss · Answer

Kinda confused where you get such numbers. Or how buyer is doing financing. Being a quad it qualifies for FHA financing. Usually is 3.5% down. $900,000 x 3.5% is only $31,500. According to this Generally, the most you can borrow with an FHA loan is $420,680. That applies to single–family homes, with limits increasing for 2–, 3–, and 4–unit properties and in higher–cost counties. The maximum FHA loan amount for a 1–unit property in a high–cost area is $970,800. And for a 4–unit home, it's nearly $2 million. Dec 8, 2021

Is this anything they've considered?