Landlord wants to sell house I'm living in

[Brett Mather]

My family moved to Scotts Vally, California in August of 2020 and rented a townhouse with a 12 month lease. The owner recently contacted me and expressed his desire to sell the house and offered it to me. If I choose not to buy he expects to put it on the market (which seems high-demand/low-supply) later in the summer and allow me to stay through the lease. The owner is willing to do the deal without agents so he'd save ~5% on the fees and offer us a lower price than he'd list it for on the open market.

My family loves the house and area and we think we'd like to buy.  I believe we have the means to do so (I do have plenty of work/research to do on that front) but my primary question is how to determine a fair price? He purchased it brand new in Feb. 2020 for $998k and said he believes he could list it competitively on the open market for $1.1M (he did make some improvements to a closet and backyard, but not too extravagant). He'd sell it to use for the $1.1M minus 5% for $1,045,000. 

It sounds like a decent deal, but I'm not completely convinced that it would sell so easily for $1.1M on the open market. How should I go about building a convincing argument for the value of this house? 

[Matt Moreland]

Hey, @Brett Mather! Sounds like an interesting situation. 

I would reach out to a local Realtor (or three) and ask if they would mind running comps for you on the property and letting them know what updates have been done to it. I have a feeling if the market there is anywhere like it is in much of the country right now, he could likely get $1.1m pretty easily for it. However, I would use the average of the comps provided from all the agents you speak to in order to come to a decision on whether or not you're getting a good deal or not.

If it ends up being that the average is still less than his number minus the 5%, I would provide him with this information and data from the Realtors backing it up as part of your justification for your offer. On that note, if that is the route you pursue, I would come to him with a solid offer as part of the proposal so that he has something to sign on if he is agreeable to everything.

Hope this helps, and best of luck! Sounds like a great opportunity to start building equity in a quickly appreciating market!