How to Accommodate 'Extracurriculars' into a Duplex Value?

[Eric Long]

I am looking at duplex that has a great location of about 1 block from a major hospital, 1.5 miles from a major university and about 1 mile from downtown of a city of 100,000. Further, it has a location on a corner lot overlooking the river and a park (not directly on the river, but right across the street) and is in a historical district. The house itself is definitely in need of upgrades but is quite livable and is move-in ready at this exact moment. Here is the Zillow for pictures.

I say all that because I cannot make heads or tails if my offer is a completely disrespectful low-ball, or the sellers are vastly overstating the sell price. It is listed at $180,000 but I want to offer $120,000. I have poured over duplexes in the area that have sold within the last 2 years. While they don't have the same 'extras' I mentioned above, they are nearly identical in square foot, age, layout and location. At best they are selling for $30/square foot. Even using an income perspective and a 7% cap rate (which I think is more aggressive than what is warranted), the property is coming out at about a value of $130,000 at most. When I compare the total layout of the property (treat is like a SFH), the comps I get are around $50K-100K -- and they are still within 0.5 mile with a similar neighborhood. Finally, just comparing the house to the neighborhood, it would be, by far, the most overpriced house for what you get in the area.

My thought process is that is looks like it is part of a trust and the children just want to get rid of it. The realtor told mine they had a hard time pricing it and they may be thinking of it as a SFH instead of pricing as a duplex (different crowd is attracted to a duplex).

Am I crazy about thinking the house is insanely over-priced? I don't want to low-ball them and then they won't even contend with further offers as I really like the place (I'll house-hack it). Are those 'extra' features really worth the extra price? Especially since this isn't a SFH but a duplex?