How we saved ourselves $57,000 before closing day.
Spoiler alert... we negotiated the purchase price down from the list price of $170,000 to the eventual purchase price of $113,000.
But what we did isn't as interesting as how we did this.
I try to constantly pay attention to the market and evaluate properties even if I likely won't buy them. At this time we had been looking for an investment, ideally a multi-family and most on market properties were very over-priced.
There was specific street in a town we like to invest in that had multiple, multi-families for sale, large houses, decent pictures, bigger, flatter lots, and high list prices. On the other side of the street the yards all have smaller lots, sloped yards, and there happened to be one multi for sale that had been sitting around a month with only one picture. I noticed the other properties getting a bunch of attention, and realizing they were all over-priced I ran the numbers on this smaller house across the st.
At the list price of $170k there was no chance it could work.. yet. But I really evaluated the numbers and made a note to look back at this house in the future.
Now the hard part.
I identified a potential good investment, but I knew it would never work with the property being so new to the market. I would drive by and even say to my wife this is going to be a great deal in 7 months.
So we had to wait.
Obviously there is no guarantee a property will stay around, but especially with buying on-market properties it can be very important to go after properties with higher days on market in some cases.
Fortunately the listing was rough, with only 1 photo, and the list agent and seller were difficult to deal with so I had that working for me and my waiting plan.
Several months did pass, and this property didn't even budge.
Never changed to deposit, never changed list price, nothing.
I called the agent and talked a bit about the property.
I told them I was really interested in it but there was no way I could afford to pay list price unfortunately and said I want to make an offer but honestly it's really low, I don't want to offed anyone, it's just the number that makes sense for me on this property.
She assured the seller is looking to move it, and encouraged an offer.
And I offered her $110,000.
She quickly replied, no there's no chance.
I asked if she wanted to get back to me after she talks to the seller and again she said no they'll never accept. No chance.
I ended by saying "alright, well thanks for taking the time and definitely reach out if anything changes."
I waited around 3 weeks, and called the agent again.
I asked if there were any changes and now the agent said she thinks if I can get to around $125k she thinks she can get the seller to accept.
At $125 this house was a decent deal, but I was hesitant and I said, "I really have to think about it. I appreciate you trying to work with me, but I have to talk with my partner and see if we would be able to make that work."
I called her back the next day and told her we would make it work at $125k.
We sent the offer and got it under contract.
The Last Negotiation
After our inspection we found the property to be in pretty rough shape, including old boilers, windows, oil tanks, both units needing work, and plenty of exterior repairs to be done.
We got our inspection report and brought our concerns to the agent.
We explained some of the unforeseen issues that we discovered during our inspection and told her for those reasons we could only pay $113,000 for the property which the seller eventually agreed to.
If you're buying off-market, there's likely a whole different strategy needed to negotiate a price. But for on-market stuff, days on market can be a massive lever you can use to negotiate a good price. We identified a property that would likely sit a while, and we were patient.
Despite the agent saying "There's no chance" to use, multiple times.
When the time came, we were persistent in following up with the agent, having conversations, being friendly, building a relationship, making multiple offers, implementing negotiation strategies and eventually closing the deal.
Currently we are scheduled to close on the refinance on this property, this month which will allow us to pay off all existing debt, and pull all cash out of the property.
So, the list price was: $170,000
Purchase Price: $113,000
Amount Financed: $84,850
Total Cash invested (Including Repairs): $42,000
Gross Rent: $2,075
6-Month Refinance Appraisal: $192,000