Is it worth it to pay commission on off-market deal as a buyer

[Alyssa Davis]

I've been renting a house for 2.5yrs, and have discussed purchasing the house from with the owner/landlord. The owner is planning to put the house on the market in January if I don't decide to buy. Unfortunately, in this market it won't make for a good flip, but the plan would be to buy it as my primary residence, continue to live in it for a while and fix it (the house needs some renovations/hasn't been upgraded/but of course it's still "liveable"). Eventually either sell it or rent it out once it cashflows (current market rent would barely cover mortgage alone, but eventually would be able to cover maintenance, repairs, management, etc.) I've spoken with a realtor and the property is comped at 390k, however Zillow says it's 400k and redfin says 420k! I agree with the realtor, but I'm up against the owner who trusts Zillow (plus could probably get multiple offers for more just because of the highly competitive/low inventory market we live in).

My question is, how should I make an offer? One thought is to give her two options 1.) 400k and seller pays realtor commission at 2.5% (our agent agreed to do a dual rep for only 2.5% total) OR 2.) we pay 390k AND 2.5% commission. The problem with option 2, is I would rather put the 10k into renovations rather than pay extra for the commission.

Is there an incentive for the seller to go with one option over the other? Should I try to work it out directly with the seller first and then just send the details over to our agent to make it formal or should we write up two different offers?