Negotiating with Chase

[Bill Briscoe]

So I'm trying to buy a foreclosure. It needs flooring, paint, siding repair, roof, some drywall repair, etc. I've put all the assumptions into a model and came to a max offer price of $84K.

However, I wasn't totally comfortable with my assumptions so I hedged and went in at $83K. Asking price was $90K. The other party's realtor's first reply was - there are multiple bids, please bring highest and best. I left my bid unchanged. Next day they come back with - the client has chosed to negotiate separately with you, counter is $87,500, addl $1K in earnest money, 7 days for inspections.

I replied with - agreed to addl earnest and 7 days for inspection, but left price unchanged. Bank replied last night with: final counter: $85k

This property has been vacant for 2 years, post foreclosure and for sale since Jan '13. They already dropped the price from $94K and at least one buyer has walked bc it couldn't qualify for conventional loan. I don't think there are any other buyers right now.

So here is my big question - what does "final counter" mean? I'm comfortable going back at $84K since that was my original max bid and that is what my bank has alread written a pre-approval for, but $85K starts eating into my already thin margins. Yes, I would still cash flow if I held it as rental for several year - and there isn't a whole lot else still available of this age/quality/area and $/sq ft. So should I be willing to walk over $2K? Would the bank walk over $1K if I came back with final offer of $84K?