How do I sweeten the deal?

Question

I gave my max bid on a house that needs a lot of work and was rejected. The house is in a very nice neighborhood and fully remodeled comps are 50 - 70k over asking.  I think this is the reason the owner is hoping to get more. House has been on the market 60 days and the owner is no rush to sell. House is vacant and paid for. We are apart 13k but that would take up almost all of my profit in the flip. As I said, the house needs a lot of work. 1978 build with all original interior, floors were torn up, some foundation issues, pool needs replastering and the enclosed patio needs to be torn down.  My initial bid asked for no concessions, only an inspection contingency. Conventional loan with 20% down. What else could I do to? Any creative ideas?

Pat L. · Answer

In the old days I would approach them with an offer of a high interest seller financing deal at my price with 10-20% down. I would show them an amortization table & what they will recoup in 5 years. BUT I never agreed to a pre-payment penalty so as soon as the property was ready to sell or in our case hold & refinance we pay them off. It worked well but these days, if its a viable property, we just go in cash at our price, close in 30, no conditions & that sometimes works. Lost quite a few but the ones we won more than compensated for those we missed.

Silvia Ochoa · Answer

Yes, it is a flip. It is "habitable" but not by much. Most definitely not a motivated seller. I was hoping to learn some tips that a more seasoned investor has used to get this type of seller to budge. My guess is most investors don't waste their time. I guess it's on to the next.

Amanda G. · Answer

This is not going to be what you want to hear. Sounds like they are just not motivated. Are you going to be able to get a conventional loan for a property with that much damage? Mostly banks want the house to be habitable for conventional mortgages. Maybe run it by your mortgage person before you get any more attached to the deal.

It sounds like the plan for this is a flip?