Negotiations When Purchasing Existing STR

[Dina Schmid]

We're under contract for a SFH that is currently in use as a STR. Inspection revealed A LOT more problems than we ever imagined a house of this young age would have. We asked them to address 5 items that we saw as the most expensive and/or critical. Our realtor has informed us that they will address two lower cost items on the exterior of the home and want to provide us with a cashier's check at closing to address the other three. I believe part of their motivation is that they would have to cancel reservations to get the remaining work done.

We have quotes and know what the work will cost (we're talking tens of thousands of dollars). I haven't turned over our estimates as I told our realtor that the estimates won't cover the real cost to us, which is higher due to loss of use (no rental income while work is being done) and time that we'll have to invest in hiring and coordinating the work. 

We have 7 days left to reach agreement on this and I'm not hopeful at this point. I know we're in a good position because the sellers will now have to disclose some of the crap-ton of problems their place has and the foundation expert said that by refusing to fix the foundation they may end up having to be in a "sold AS IS" position which will drop the value significantly. 

Any recommendations or suggestions for ways to negotiate this (and not lose our earnest money)? Do I provide my own document for what we're asking for that includes loss of use (and compensation for my time)? Do we just ask for a gigantic reduction in price to cover everything? Or do we walk (something we are seriously considering). Our realtor wants us to accept an amount equal to the estimates.

For anyone who wants the details on the issues: 1) Deck is not securely attached to the house and the stairs are leaning. This is actually the easiest fix. 2) Foundation footer didn't go below the frost line and one corner of the house has sunk 2". Helical piers placed every 5' should fix this, but for a significant cost. 3) Due to a toilet becoming loose and failure to recognize that the toilet leaks every time it is flushed, the subfloor has "significant deterioration." Basically, the bathroom has to be gutted and subfloor replaced. This is not only expensive, but time consuming and it can't be rented during the renovation. Prior to finding this out, we agreed to honor all current bookings after taking ownership (we would get the income). But that means we have to push this out even further and the longer the issue isn't addressed, the more damage that is being done. At some point the subfloor under the bedroom may also be affected (it's a small bathroom and the toilet is right when you walk in) and the cost will go up even more. Adding that we won't honor those bookings is likely part of the negotiations, but again, loss of income.