Worth Negotiating over $10K??

Question

Bill B. · Answer

My BIGGEST regrets BY FAR are the properties I didn’t buy while arguing over $5-$10k. The LEAST one of those properties has appreciated is $250k. But luckily I saved $10k. I’ve lost well over a million dollars standing firm.

If you’re not flipping $10k just doesn’t matter. You’re talking about $54/mo at 5%. If that’s make or break I wouldn’t but it for $10,000 less.

Ps. I assume you’re getting a loan. Either it will appraise at the higher amount or it doesn’t and you probably get the discount to save the deal.

Bob S. · Answer

Im assuming you using a loan, if so who cares about 10k , its meaningless.

John Liberati · Answer

I will usually Decide by the numbers what the absolute highest amount I can pay, and start negotiating at 10% less than that. If the price is over that amount I forgo that property. If there is a creative way to buy it see if your numbers still work. I personally look for at least $100 in profit a month per unit.  It's not always a hard and fast rule that we have, but it's a good starting point for us.

Alexi Schreier · Answer

Correct you're limited to 2% seller credit for investment properties on conventional loans. Which adds up to $2,900 if the property appraises at $145k. That's more attractive to you as the buyer if you're financing because that money is going directly back into your pocket. The difference in your monthly mortgage payment for a purchase price of $140k vs $145k is very small, maybe a few dollars per month on a 30 year fixed.

For the seller though it doesn't make a difference at this price point whether they lower the price or give you a credit for closing costs. So you would need to have some kind of reasoning for your seller credit like repairs that need to be made for example.

Tim Kaminski · Answer

@Alexi Schreier Have wiggle room but seller won’t even drop to $140k at this point.   I have considered $145k but they cover closing costs but I have heard that on investment properties, seller cants cover the full amount. 2% maybe.

Alexi Schreier · Answer

Is your max number on this deal 135k or do you have some wiggle room in your numbers?

Can you think of any other ways of working with the seller to give them price they want but asking for better terms for you? Price isn't everything. Is there anything you can negotiate with payment terms, repairs, seller credits, etc that would be advantageous to you?

Caleb Brown · Answer

I'd stay firm. If you tell them 135K they might come down to 140K then you can see if that'd make sense. In this market on the buy side you have more leverage especially since that duplex has been sitting for 1 month

Tim Kaminski · Answer

@Chris Seveney Yep that’s the plan right now. Hold at $135k and wait

Chris Seveney · Answer

@Tim Kaminski

Depends on the numbers. For me I stick with my number and do not let emotions kick in.  My number is my number.

If my number is $135k then I would not move from it.

Worth Negotiating over $10K??

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