Philly HouseHack. Did Not Appraise. Help me Re-Negotiate deal

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Philly HouseHack. Did Not Appraise. Help me Re-Negotiate deal

Nick Schmid
Real Estate Investor · Philadelphia, PA · Member since 2016 · 9 posts · 1 vote

Currently under contract for $370k no seller assistance. Original Asking price was $356k. The property was last purchased for $310K in 2017 by the seller. 


I am seeking feedback & suggestions on how to best Re-negotiate this deal for the best outcome, being not over paying for a property & optimizing cash flow.

Currently one of the units is rented for $1550/mo. The home inspection did not reveal any huge surprises but I am estimating roughly $13,500 for repairs & updates.

The second report is my attempt at a counter offer. 

I realize this deal may not seem too exciting at first glance but if my calculations are correct I should be able to pay down enough in less than two years to get rid of my PMI & cashflow for $468/mo allowing me to utilize a second FHA loan keeping this as a hold investment. All feedback is welcomed, bring your best ideas.

Current Offer

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*This link comes directly from our calculators, based on information input by the member who posted.

My Renegotiation Offer Attempt

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*This link comes directly from our calculators, based on information input by the member who posted.

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  • Jeff CopelandBusiness Member
    Real Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
    6y

    From the subject line and context, I assume you are under contract for $370k, and the appraisal came in short?

    What did it appraise for? That will tell you exactly what it is worth, and should be the basis of your negotiation. You should not expect the seller to take less than appraised value, especially if you went under contract higher than that.

    When an appraisal comes in short, one of three things usually happens:

    1. The seller agrees to lower the price.
    2. The buyer agrees to bring more cash to closing
    3. The buyer and seller split the difference somehow and meet in the middle. 

    As you would expect, the first and third options are the most common. But there's no reason to expect the seller to take less than the appraised value. The seller would be foolish to do so.

    Finally, I didn't dig too deeply into your numbers. But if they bought it for $356k, what makes you think they'll sell it to you two years later for $335k?

    Copeland Morgan LLC4.770 Reviews
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  • Nick Schmid
    OP
    Real Estate Investor · Philadelphia, PA · Member since 2016 · 9 posts · 1 vote
    6y

    @Jeff Copeland I’m sorry the appraisal came in @ $335k

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  • Jeff CopelandBusiness Member
    Real Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
    6y

    @Nick Schmid - That makes more sense. Thanks.

    Unfortunately, this one may be impossible to salvage. 

    Your analysis of the value is a largely a moot point, since the appraiser's word is pretty much gospel. 

    Maybe they overpaid two years ago or whatever, but I can't imagine the seller taking that kind of loss after two years, unless they're in some kind of distress. 

    Sometimes the seller wants to sell, and the buyer wants to buy, but the deal still gets derailed by the appraisal, financing, or any number of things. It happens. 

    Copeland Morgan LLC4.770 Reviews
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