Make an offer on a stale flip?
**I realized in hindsight that I wasn't sure which forum this would fit in. Originally posted in rehab/flip forum.**
Hey all- I'm curious if this seems like it's worth making an offer OR any input on negotiating with a flipper in default.
Asset: SFH in B+ neighborhood, 2100 sq ft, 4 bed, 2.5 bath. Nice cosmetic rehab w granite counter, new appliances, HVAC, siding, etc. but poor attention to detail. Didn't pull permits for a finished attic, 3rd bathroom, or a new front porch.
ARV: ~$445k if fully permitted/up to top condition (same as list price)
Market rent: ~$3200/month
Distress: Public records show that the investor has a hard money loan for ~$340k which matured in August of 2025 and it's been on market 250+ days, with only slight price drops from the full market comps, never gone into contract. Idk how anyone would even get financing for it given the unpermitted improvements + foundation issues.
Repairs needed: (incl the report from consultation report from a structural engineer)
- Permits for the finished attic (no egress window either), new bathroom, and front porch
- No ceiling fans in bathrooms or dryer vent accompanying the new washer/dryer hookups.
Basement! The engineer pointed out it has some serious issues...
- The south corner has sunk approximately 2-3 inches, which is where there's puddling water and some mortar deterioration.
- Needs an interior perimeter drain system to compensate for the failed exterior drainage tile
- The south corner should be lifted with helical piers to level out and stabilize the sinking
The investor: The list agent seemed to be bluffing and said "If you want to make an offer, you should go quickly. The seller said they're going to pull the listing and rent it out" (not even possible.) Then 4 days later, they texted my agent and asked if I'd be interested in a walk-in sauna to sweeten the deal LOL!
When I asked if the seller prefers a cash offer to go faster or a higher offer, they said he's not worried about the speed as much as closest to list price (confusing to me.) This investor has done many flips in our city, so it's not a rookie.... just confusing.
My goal: Live-in BRRR-lite. If successful, I plan to make this a house hack with a group of friends who plan to rent from me a few years, so I could either use an FHA 203k loan OR a cash offer via private loan then refinance.
My questions:
- Given those repairs needed, what kind of max offer would make sense? (if at all)
- Do flippers get delusional when they start to default on a hard money loan and refuse anything below their profit margin? I'd think they'd just want to get out asap to avoid foreclosure? Any advice on working with a flipper in default is appreciated.