Seller owes more than accepted offer

[Michael Arreola]

I recently retracted an offer I made on a house due to the seller delaying close for an unreasonable amount of time. His reason was actually legit but I felt I needed to move on to something a little more promising. I wanted to throw this out there and see if any of you have any creative ways to make this deal happen. I will try to make this as short as possible.

The current owner bought the house about five years ago and planed to flip it. Its an old house so it needed a total rehab. He got a lot of the structural work, etc. done and was in the process of having all new plumbing, electrical and HVAC installed when it was broken into and totally stripped of all the copper. Apparently this demotivated him so it sat vacant for the next few years and recently he listed it for $50k. Sold comps support an ARV upwards of $120k but it needs around $40k in repairs to get there (thats with me being the GC). The house is obviously overpriced as it is also in need of foundation work. I offered $30k cash with no contingencies and a one week close- he accepted. The problem is, he still owes around $45k and needed an additional six weeks to gather the extra $15k to bring to the table. This came with no guarantee that we would close within this time period so I countered with $1,250 off the original offer for every week closing is pushed passed the six week close date. They did not like this offer so I backed out.

This was a month ago and the property is still sitting vacant. According to the listing agent the seller still doesn't have the funds to bring to the table. I would really like to have this house as it is in an up and coming neighborhood and has a ton of potential. So, my question is, how could we make this deal work without over paying or waiting an unknown amount of time to close?

[Account Closed]

Originally posted by @Michael Arreola:

This came with no guarantee that we would close within this time period so I countered with $1,250 off the original offer for every week closing is pushed passed the six week close date. They did not like this offer so I backed out.

This might be the worst counter offer I have ever seen. The seller has a problem. A problem that involves bringing cash to closing. He's already lost a ton on the rehab and now he has to pay to get out and then you make it so he has to pay more if it doesn't happen on your schedule? Talk about de-motivating. And if he doesn't have the cash it's all moot anyway.

His problem is not your problem. But since you want the property, doesn't it make more sense to make it easier for him to close, rather than harder?

Does the seller have anything he can bring to deal that you'd be interested in? Trucks, RVs, vacant lots, equipment? Could he give you a note for $15K on another property? If you closed for $45K and got him out of the deal and got something else of value, would that work for you?

What if you took over the current loan at $45K. What are the terms, is the loan in default? If the terms are decent, you could put the payoff off until you finish and re-sell. Taking over payments with nothing down is some cheap leverage.

So, if the seller could bring something of value to the deal, and you could take over a decent loan, would that work for you?