Realtor · ND · Member since 2019 · 54 posts · 31 votes
So first to start I’ve read the other forums and I already know changing an offer price is bad practice after the inspection normally.
My question is for the long distance investors offering on multi family without ever seeing the property.
My price offered was based on the units being relatively updated (word of realtor) and only saw pics of the one vacant updated unit. The inspection showed the other units have not been updated since the mid 70’s and will need major overhauls during their next vacancy. (We’re taking about still having those 70’s yellow appliances) The seller will most likely take care of the multiple active leaks and other problems from the inspection.
My question is, is it still bad faith to negotiate price now that I know the building looks like a money pit of updating for the foreseeable future and not the deal I anticipated during the discussions.
Investor · Cambridge, MA · Member since 2017 · 195 posts · 106 votes
5y
I am in this process as well. I am bidding on a properties without seeing them and waiting for the inspection report and then I re-examine my offer and then I resubmit another offer based on the work that will need to be done; you could also ask for closing credit that works just as good to have less money out of your pocket up front.
Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes
5y
@Ben Kappel as a general rule on larger deals (100+ units), most deals are sold "as-is". It is up to you and not the realtor to appropriately account for your capex budget for changing out the yellow appliances.
Now, if the asset has a serious structural issue or if you discovered a significant number of down units not disclosed by the seller, then a retrade on price is appropriate.
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
5y
Of course you can change the offer after inspection that's what inspections are for IMO. Most times you can't see the units or documentation unless you make an offer so it is a weeding out process. Base your new offer on the value you have determined once inspected paperwork and property. Be thorough it is a risky business even more so if you don't do your homework.
Investor · Cambridge, MA · Member since 2017 · 195 posts · 106 votes
5y
I am in this process as well. I am bidding on a properties without seeing them and waiting for the inspection report and then I re-examine my offer and then I resubmit another offer based on the work that will need to be done; you could also ask for closing credit that works just as good to have less money out of your pocket up front.
Realtor · ND · Member since 2019 · 54 posts · 31 votes
5y
As always thank you very much for the advice. Much appreciated. The deal closed and worked out with some extra closing credits, and the appraisal also came in lower which helped get that price down to better reflect the property.