Price Negotiations on distressed property

Rehabbing & House Flipping
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Price Negotiations on distressed property

Quinzel Waiters
Member since 2022 · 4 posts · 1 vote

Hello all I'm new to the Real estate space but I'm working on getting my first off market deal

Currently I'm looking at a heavily distressed property that's priced too high. It's a complete gut job. Needs new everything floors, kitchen, bathroom, paint, roof, landscaping and also has termites and a tentant that's not currently paying rent, for a 1000 sqft property they want 160,000 for it, but my comps say for a rehabed house in similar sqft property in that zip code would sell at 220,000k and I would say it needs atleast 65,000 to 75,000k in repairs so my offer price was at 100,000 to 110,000 and the buyer will not entertain my offer

I would like to offer more but if there are any surprises I'd like to be prepared for those cost during the rehab process. Should I move on or does anybody have any strategies on how to negotiate? Also they don't want to do any creative financing.

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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1y
Quote from @Quinzel Waiters:

Hello all I'm new to the Real estate space but I'm working on getting my first off market deal

Currently I'm looking at a heavily distressed property that's priced too high. It's a complete gut job. Needs new everything floors, kitchen, bathroom, paint, roof, landscaping and also has termites and a tentant that's not currently paying rent, for a 1000 sqft property they want 160,000 for it, but my comps say for a rehabed house in similar sqft property in that zip code would sell at 220,000k and I would say it needs atleast 65,000 to 75,000k in repairs so my offer price was at 100,000 to 110,000 and the buyer will not entertain my offer

I would like to offer more but if there are any surprises I'd like to be prepared for those cost during the rehab process. Should I move on or does anybody have any strategies on how to negotiate? Also they don't want to do any creative financing.


 Move on. Even at $110k I think you are pushing it as if you were to get a loan for $150k say your holding costs for that loan and closing costs could be $20k+, then you have selling costs of say 8% which is another $16k. So if all stars aligned and you were in it for $185k + 36k you are at $221k - just lost $1000.

If it needs $75k in work I would probably be around $85-90k for that home.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Quinzel Waiters:

    Hello all I'm new to the Real estate space but I'm working on getting my first off market deal

    Currently I'm looking at a heavily distressed property that's priced too high. It's a complete gut job. Needs new everything floors, kitchen, bathroom, paint, roof, landscaping and also has termites and a tentant that's not currently paying rent, for a 1000 sqft property they want 160,000 for it, but my comps say for a rehabed house in similar sqft property in that zip code would sell at 220,000k and I would say it needs atleast 65,000 to 75,000k in repairs so my offer price was at 100,000 to 110,000 and the buyer will not entertain my offer

    I would like to offer more but if there are any surprises I'd like to be prepared for those cost during the rehab process. Should I move on or does anybody have any strategies on how to negotiate? Also they don't want to do any creative financing.


     Move on. Even at $110k I think you are pushing it as if you were to get a loan for $150k say your holding costs for that loan and closing costs could be $20k+, then you have selling costs of say 8% which is another $16k. So if all stars aligned and you were in it for $185k + 36k you are at $221k - just lost $1000.

    If it needs $75k in work I would probably be around $85-90k for that home.

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    • Quinzel Waiters
      OP
      Member since 2022 · 4 posts · 1 vote
      1y

      @Chris Seveney that's solid advice thank you for that I don't want to as they say "bite off more than I can chew" but at the same time I know I'm new, so I have to have more head room for stuff I didn't account for initially, but I will move on to the next.

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  • Peter MckernanBusiness Member
    Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
    1y

    I would just keep looking and follow up with the person. You'll end up finding out if there is no motivation to sell at a certain price, then it is not worth consistently asking for the same price that the person said no to. Just go talk to more sellers and find one that has the same type of property and condition as this one that is motivated to sell it to you for a number you want it for compared to comps. 

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    • Quinzel Waiters
      OP
      Member since 2022 · 4 posts · 1 vote
      1y

      @Peter Mckernan That sounds fair I'll keep it moving then. I'm just surprised how much the sellers thinks it's worth but thank you for your advice.

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  • Dominic M.
    Property Manager · Northern Virginia & DC · Member since 2020 · 157 posts · 69 votes
    1y

    For your first deal I would suggest a cosmetic rehab to mitigate your risk. Will be more difficult to find as everyone wants to buy these deals. 1 bad deal can destroy 3+ good deals. Unless your background is in construction/ trades and you truly understand your costs and risks. 

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    • Quinzel Waiters
      OP
      Member since 2022 · 4 posts · 1 vote
      1y

      @Dominic M. That's a really good idea. I'll keep my eye out for any of those light rehab deals thank you.

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  • Peter MckernanBusiness Member
    Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
    1y

    There is so many times a seller will say it's worth this.. I know that it is not worth that, or that is not what I am willing to pay. Then the seller gets that exact amount for the property at times (it's a low percentage but it happens). The best course of action is talking to so many sellers through your marketing that you find the ones that are truly motivated at the price you are willing to buy their property at..

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  • Stepan Hedz
    Realtor · Phoenix, AZ · Member since 2025 · 57 posts · 21 votes
    1y
    Quote from @Chris Seveney:
    Quote from @Quinzel Waiters:

    Hello all I'm new to the Real estate space but I'm working on getting my first off market deal

    Currently I'm looking at a heavily distressed property that's priced too high. It's a complete gut job. Needs new everything floors, kitchen, bathroom, paint, roof, landscaping and also has termites and a tentant that's not currently paying rent, for a 1000 sqft property they want 160,000 for it, but my comps say for a rehabed house in similar sqft property in that zip code would sell at 220,000k and I would say it needs atleast 65,000 to 75,000k in repairs so my offer price was at 100,000 to 110,000 and the buyer will not entertain my offer

    I would like to offer more but if there are any surprises I'd like to be prepared for those cost during the rehab process. Should I move on or does anybody have any strategies on how to negotiate? Also they don't want to do any creative financing.


     Move on. Even at $110k I think you are pushing it as if you were to get a loan for $150k say your holding costs for that loan and closing costs could be $20k+, then you have selling costs of say 8% which is another $16k. So if all stars aligned and you were in it for $185k + 36k you are at $221k - just lost $1000.

    If it needs $75k in work I would probably be around $85-90k for that home.


    Negotiating distressed properties takes skill, and a lot depends on the seller’s situation as well as the property's condition. If the place needs major repairs, that should absolutely be factored into the price, otherwise, you’re just overpaying for problems. I’ve found that showing a seller actual repair estimates can sometimes help bring them back to reality, but not all sellers are reasonable. Some are stuck on a number no matter what.

    At the same time, knowing when to walk away is key. Some deals just don’t make sense, no matter how much potential a property has. And I totally agree with the idea that curb appeal matters, even with distressed properties. If you’re trying to flip, what’s the point of fixing up the inside if the exterior still looks like an abandoned lot? Buyers will never make it past the front door.

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