Seller postponed closing till Jan 1st for his tax purposes

[Carlos Martinez]

Hello everyone. I posted a few weeks ago about a 4 plex I was planning to put an offer in. Refresh, 4plex in NM with very low rents ($375 for 2bd 1bth) and asking price of 174k. I am going to use my VA and I will occupy one of the apartments. You will see from the previous post that the current numbers for the apartments create negative cash flow but the rents are at least $150 under for that area and can easily be increases with a few upgrades. ( I have seen 3 units myself).

Anyways, I put in the full asking price with the conditions that they cover all closing costs (VA requires 3% of loan amount), rent rolls, income and expenses for the last 2 years, current leases and any account that has been set up aside for repairs of building and deposits for the current tenants if any. I am new to all this so I might of have missed something or messed up but I'm learning. Is there anything I should ask for in exchange for the condition that we close as he requests? On the 1st?

Initially they accepted the offer and scheduled to close on Nov 1st and accepted all conditions. Today I received a call from my agent telling me that they would like to push back the closing till Jan 1st because if its before, the seller will get penalizes on his taxes. I have no clue what he meant by that or if that is something that's true.

I would greatly appreciate any help or advice! Thank You

[John Wanberg]

Carlos, first, I am not a tax accountant.  In my experience however, sellers are motivated to delay sales if they think they can pay fewer taxes by booking the income the following year.  This can happen as a result of an income tax bracket (they might be planning on making less next year than this year), capital gains rules (if they have held the property for a shorter period of time), or planned losses (they can use losses to offset gains on this property and balance their tax burden). 

I don't believe that you need to accept their offer to delay.  If they have accepted all terms of your offer, their side of the contract (read it to double check) requires them to honor what they signed.  You could ask for further concessions prior to agreeing.

Another potentially interesting strategy is to see how much equity the owner has in the property, and to see if they would be willing to do seller financing.  This could let you buy the property immediately, with the current owner acting as the bank.  You would then pay them off slowly.  It can avoid the closing costs and hassle of dealing with a bank to do the loan.  Search "owner financing" on the forums for more info.