Pre forclosure help please!

[Tony Velez]

Hi,

I found a 3 family house I'm interested in. I talked to the realtor and she said they would like to move quickly because the house is close to being foreclosed on. I haven't seen the inside of the property yet. I also found out the house was under contract but the deal fell through. According to the real estate agent the buyer was being difficult and picky. This info is from one phone call with the agent. they are asking $226,000 but she claims they need as close to 200k as possible. 

Now according to my analasys the numbers look great at 200k. My only concern is according to the tax records 2012 the taxes were almost double the property. I'm nervous about this possible major tax increase. It boils down to what the new assessment would be in 2016. The properties are assessed every 5 years. 

My question is obviously this person is a highly motivated seller. How can I negotiate with the seller on asking price? 200k would be way too close cash flow wise if the taxes go way up. Obviously he's motivated to sell. Help me out with some suggestions on offers? Thank you!

Here is the property. 

[Kim Knox]

Do you have your own Realtor, or are you working with the Listing Agent? 

My best advice is to call the tax assessor directly and let them help you with an expectation before you risk this deal.  Ask them also if the current owner is receiving any special tax exemptions that have lowered their tax amount due (Veterans exemption is an example).  Ask them if they have a cap on the increase on property taxes per year.

I have never heard an appraiser change a value on a property because of an anticipated tax bill, so although it is a very valid concern, it doesn't hold a lot of weight in your negotiation.  

You have indicated the numbers look great.  You can check public records to see what mortgage $$ the Seller has taken out, so you can see if they might need that $200K to sell and pay their closing costs.  For example, if they refinanced last year for $190K, they will not have any room to negotiate with you.  If they bought 5 years ago and only took a mortgage of $110K, they do have room to negotiate.       

If my Seller tells me to let a specific Buyer know they will come down to $200K, then that Buyer wants to further negotiate (when it appears to be a "great" deal), I move on to the next Buyer. I would suggest the Seller that they reduce the price to the open market to $200K and get a Buyer who is willing to pay it, and potentially start a bidding war.