Excellent potential house flip (Advice Please)

[William Johnson]

I would like to get some opinions about a particular deal that I am working on closing on and how I dealt with it just to this point. I received a call from a man who had a house for sale at 750k. I went through the questioning process.

How much the house is worth? 750k

What renovations needed to be done? He said there were none

I then asked him what is the minimum he would accept? He said 730k

I thanked him for his interest and for the opportunity and I wished him the best of luck in selling it and as I was getting ready to hang up (I try to keep these sort of phone calls short)

Seller: “Wait a minute how much would you be willing to pay?”

Me: I would offer you a maximum of 550 but probably something closer to 500 for the house”

Seller: Laughing “Let's make an appointment for you to see the house”

Me: “I will not pay anything more than 550 so if we are making an appointment it is because you are telling me that this is an offer that you would be willing to accept”

Seller: “I understand.”

I went to go and take a look at the house after pulling comparables, I drove around the neighborhood which is a neighborhood that is not uniform it is a high class rich neighborhood where establishing an ARV is a challenge due to the lack of uniformity.

This was a man living in Canada but who is from another country and the reason that he's selling is because he doesn't live in the house and he doesn't want to continue making the mortgage payments. He also had a Canadian business partner with him who obviously was acting as an advisor.

I offered 350k upfront for the house with 200k to be held by the seller as a 2nd mortgage at 4% to be paid at resale of the house. I wrote out the offer and handed it to him with a deadline of 5 days.

He called me after the deadline and counter offered 600,000 while leaving me all the inclusions in the house such as a 1,200 bottle wine collection and all the furniture in the house but, instead of 550 he wanted 600k. I am planning on doing a counter offer of 550k plus the average appraisal value of three home liquidators because I highly doubt that I can liquidate the contents of his house for 50,000.

I should also mention that combined with my conversations with 3 experienced agents and comparables sold I evaluate the ARV at 710k with 10k of renovations.

I would be very interested in having some advice on how to approach this negotiation in a way that would maximize my chances of having a signed and accepted offer.

[William Johnson]

Originally posted by @Matt Gehrls:

Is that how the 70% rule works normally? Told you I'm inexperienced. That kind of money sounds fantastic to me.

 I adapted the 70% rule, if I am never going to see the 208k and I am also never going to be paying it out of my pocket I calculate it out of the equation for the 70% rule.