I need advice on negotiating a flip purchase

[John Franczyk]

I have a track on a house that is a good flip candidate - 2 Br, I Ba, 70+ year old structure with a strong foundation and good systems, sitting on 1/3 acre at the end of a cul de sac. The seller is 70+ years old. He's lived there all of his life.

 The 6 or 7 neighboring properties have all been upgraded to 3-4 BR, 2-3 Ba. The strategy here would be to expand the house with 2 more BR, a great room, and at least one more bath. Neighboring properties are selling in the $350K range. The seller's realtor friend tells him to ask $250K. My best price right now is $130K-$150K, with an expectation of putting $150K into it. I can make the business case for a rehab deal and can get the deal done before year-end. If the seller listens to the realtor, he will go through a slow death of reducing prices until he sells it next year some time.  

The seller needs $50K to get out from under some debt. The rest would be gravy, and I don't believe he needs a big payment to cover retirement living expenses.

How do I approach the negotiation?