FSBO deal with a friend?

Question

I have a friend who is looking to sell their property. I own a rental on the same street and it has been a fantastic investment thus far. My issue is managing expectations with the friend while also making sure he doesn't feel slighted by an offer I make. While making sure I get a good deal.

im wondering if anyone has ever done this before?

His homes zestimate is 315k and the fair range is somewhere between 310k to 320k.he owes 290k on the homeI assume his best case scenario is

Price 320k , Realtor 5%, no concessions,no discount, no repairs, sell immediately = 320*(.95)=304

so best scenario  he makes is 14k

worst case

6% realtor, low end sale 5k repairs concessions, 1-2 month holding costs( call is 3k)

310k *(.94) -5k-3k -290k  =283.4 K -290k

so worst case he is in the hole 7k

Most probable

5k repairs, 320 selling , 5k concessions, 1 month holding costs, 5.5% realtor

320k *(.945) -5k -2k=295.4 K

he makes 5k

my offer.... Does this deal seem fair?

FSBO deal, I can do the repairs as I know them and have been in the house multiple times. No holding costs.

I buy for 300k and we split the closing costs he makes 10k, I make 10k in equity.  not sure if I'm being to frugal here or if I'm being to willing to give him a good deal?

Bo Smith · Answer

The trick with friends is being transparent about your investor hat vs friend hat. I always lead with "I'm gonna make you two offers - one as your friend who wants you to get top dollar, one as an investor who needs a deal. You pick which conversation we're having." Takes the weirdness out of it. How close are you two? That changes the whole approach.

Bill B. · Answer

It’s going to be hard for you to “get a good deal” without screwing your friend. If he’s your friend you offer him his best case scenario and split 1/2 the realtor commissions. Then you both win. If he’s “Just a guy you know.” And not really a friend maybe you keep the entire commission. Any more than that and you’re not “helping” your “friend”. You’re helping yourself. Which is fine. But you’ve put a price on your friendship.

Ps. Have a realtor give a real estimate of what he can sell for and his net proceeds. I have netted more than the zestimate on my last two sales. They just don’t mean anything. I guarantee if he listed his home for $349k the zestimate would be $345-$350k the very next day. I don’t think they’ve lost any of the court cases where their zestimate was too far from listing or sales prices. But maybe that possibility just causes them to cave.