Was I wrong to pull an offer

[Christian Hutchinson]

I put in an offer of a 3 unit property in a Detroit suburb.  We put in significantly less than list price, about $50K less, list was 299,900, accepting cash, fha, va, conventional, land contract.  We called the listing agent directly to make the deal.  He lowers his commission, he is working the seller to take our pretty fair, but lower than what the seller desires offer. The property will have some appraisal challenges in current condition, plus our funds are limited (less than $80K) we can put towards the deal. Our intial offer was $215K, he refused to even counter our offer.So we offer a 2 days later:

• $250K purchase price
• $50K down
• 3 years Land Contract with balloon at 36 months, with a 30 year amortization
• 7.25% rate
• We cover taxes, insurances, water, etc

He said he would think about it, that was Jan 12...

14 days ago, the listing Agent schedules a call, for me to speak with the seller directly to negotiate the deal, seller was stuck on $270K, and wanted for me to come up.  So after pleasantries I get right to it.  I tell him your property is worth x dollars because of this data, there is no current comps, but there is a direct comp selling for $200K more than yours 1500 ft away and it went pending 3 days ago.  But its in perfect condition, completely upgraded, and 500 sq ft larger. I tell him your place though up to code is visibly undesirable, beat up interior wise, and thats why this place hasn't sold in 6 years (been on and off market without sale since 2013) you been trying to sell it. He became defensive and said

"I use to get $1200/mo for the lower unit". - Seller

And I fired back "Yes you probably did 10-12 years ago and you had nice reliably families, now lets be honest I saw your tenants not from the top echelons of society. You probably get $900-$1000 per month and you are barely getting it I bet at this point. I don't need to see your rent rolls.  The market has passed you by, you selling because its not getting the money its use to the tenant quality is down.  You don't have to take my deal but when that sale down the street becomes public in 90 days, the next offer you will get will be a string of $150K-$180K Cash Offers, and you are going to come back to me asking for this deal and my war chest will be empty on another deal.  One investor to another you are not going to get your price and everyday you don't take this deal you run the risk of losing $50K or more, from what I'm offering you, no one is dumping $300K cash into this property (Offering $230-$260K cash then doing $40-$70K in rehab) because you need margins to pull your money out via a refi".

He said "Who are you? He asked his Agent if we are serious/legit" The agent confirmed we sent him a listing of our property holdings plus our cash balances there is no reason to believe we are not serious. He then explains our plans are to renovate the property to go to $1500/mo on each unit because thats what renovated places go for now.

He tells the agent to send him some comps because he believes he is getting the raw end of the deal.  I explained he gets $1300/mo, $1100/mo being interest so he essentially keeps a unit for 3 years, gets $50K right away and if I screw up, or a market downturn hits(causing an inability to refi) he now gets a fully renovated property with premium rent and a desired property to sale. So he is insulated from risk, a title company can hold title when we close the sale too, if he wants another assurance.

Over the next 4 weeks the seller does not accept the offer.  But instead slow walks warming up to the deal. I have a construction partner, lined up to do the work, and 6 times the day of or day before the "tenant" decides we can not have access to the property(sick, caught at work).  The construction partner needs to give me the final numbers on the job, we have a rough estimate, but our first visit was done in the evening at an open house. So the roof, kitchen plumbing, bathroom plumbing, etc couldn't get checked out.

The tenant was suppose to be out Feb 1, but finally its suppose to be today. Just called and refused entry.  I told the listing agent this is done, I can't wait any longer. It makes me look like a fool, and unreliable. I told the seller and listing agent as much. So I told him I am pulling this deal. The listing agent is trying to get me to reconsider. But I view this as if the seller wanted this deal he would have accepted or told the tenant to grant us access (I understand it was a long-term tenant of 7 years, but come on)

Am I offering a fair deal, or this a situation that the Agent sees a big commission check on both sides of a potential deal and is a pushing this on Seller, and the Seller is playing this smart? Waiting to the house is completely empty and maybe he gets a buyer who will offer his price. Also, am I being emotional pulling the deal. Lastly, was it a bad idea to speak directly to the seller and be transparent of my intentions for the property so they can understand my point of view and reasoning for my offer.