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Updated 3 days ago on . Most recent reply
Buying a flipped duplex
Hello all! I’m currently under contract for a flipped duplex in Salt Lake City, UT. The previous owners are investors and they are also their own agent and they renovated the property down to the studs and listed it for 250k more than what they bought it for. I found out that the owners before them had bought new HVAC, water heater, and furnace. However, they marketed it as “brand new”. It isn’t a legal duplex but was marketed as a duplex. Also, when we offered $20k less than listing price, they told our agent that another person was offering a cash offer, not sure if that was true. They also wanted to close in 3 weeks and be done with it. I’m worried about purchasing because they seem untrustworthy and I’m unsure if they did a proper job with flipping. But I’m doing my due diligence and getting it inspected by professionals. My question is, how do I negotiate with an investor/real estate agent/owner/seller for seller credits? They seem like the type that won’t budge.
Most Popular Reply
#2 Managing Your Property Contributor
- Investor
- Las Vegas, NV
How much less they paid doesn’t matter. If they had paid the previous sellers $100k more, would you want to pay $100k more? The property is worth what it’s worth.
I don’t know when hvac/furnace/water heater become “not new”. But obviously we all agree 6 months is still new. Is a year or 2 year old system new? Probably depends on the age of the property. When I sold a 17 year old home I advertised it as have all new appliances/hvac 4 years ago. Now I stated a time, but basically what all new meant is not 17 years old, about to fail/updated. Obviously you and your inspector both knew the age of the water heater and furnace/hvac when you walked through the house. The dates are right on the equipment.
The duplex question is harder. Not a “Legal duplex” can mean 100 things. The most common are 1) it’s currently and forever illegal for you to rent it out to two unrelated parties and have two addresses. 2) it’s illegal to do that unless you do “x” (pay the city, add a seperate entrance, whatever. 3) it wouldn’t be legal to be a duplex today but it has been and there fore is “grandfathered” in. 1 is a big deal, 2 is a small deal, and 3 is nothing, a non-issue.
Obviously if you just want out of the deal you use your inspection contingency and walk, you obviously haven’t waited for that to expire before asking for help. If you did make that mistake as well as the others you can try to weasel out under the duplex issue if it’s problem 1, or maybe problem 2, but most likely not problem 3. Lastly, you simply say “I’m willing to walk away from my deposit and lose it if you don’t fix A or reduce the price by B…”. You don’t spend hundreds of thousands to not lose $5-10k. Especially if it can’t be a duplex and that was your plan.
But what they paid doesn’t matter in the least. Again, if they had paid the sellers more than they were asking I doubt you’d offer over asking price. And if the “new stuff” is less than 4-5 years old on 20+ year old property I’d let that slide, although that’s the 1/2 life for most water heaters, you could ask for $700 off for half of a new one. The only “biggie” is can you use I as a duplex. If not, walk. If so, in 10 years if you buy you won’t even remember this issue. If you don’t you’ll think about how you could have bought it for $100-$200k less than it’s worth then.
Good luck.