Negotiating Tactics on a Duplex, 1st Deal

[Dan Barman]

Hi BP universe! Negotiating what will be my 1st deal as a seller/investor, the property in question is a duplex in a fast-growing, popular rural river town with lots of city commuters. Negotiations have taken a bit of a strange turn and I'd love some advice from any experienced BP members. Here's the deal; will try to keep this short.

Seller's ask was $350K which we and our agent thought was pretty high, there's a lack of comps in the area but we put it more in the $320 - $340 range. We gave a low offer of $310, seller countered at $345, we countered by coming up $15K to $325. They held firm at $345 and we walked away. 24 hrs later our agent got a text from theirs saying they'd like to know what our absolute highest offer would be. She added that maybe there could be a way for us all to "meet in the middle" but that was her idea (the listing agent's) and not her client's words. On the one hand we're happy to hear that it seems like they might be willing to negotiate again but on the other hand we don't really like the way they're trying to frame the conversation by asking us to give them our highest number without getting a counter to our most recent offer. 

The most I'd be "happy" to pay is $335 but my target # is $330. At $340 the numbers would still work out in the mid-term, profits would be very slim until we can vacate both units and remodel to significantly raise the rents to the top end of the market. Also we don't think the property is worth $340 based on what we've seen from the comps. Here's what we're considering...

Option 1.

We respond to their agent's idea of meeting in the middle by saying the ask was $350 and our 1st offer was $310, the middle between those two numbers is $330 and we'd be ok with that number if she thinks she could get the seller to agree to it. 

Option 2.

Screw it. Even though we think it's a crappy way for them to negotiate we just say that $335 is our highest offer and see if they take it. If they do, ok, it's not $330 but we'll get the property at a price we're ok paying. If they won't take $335, then maybe we go for $340 and hope the appraisal comes in low. If it doesn't we won't be ruined, just very low profits until we get both units renovated and the rents up.

Option 3.

We tell them that something along the lines of, "We've given two solid offers and our last one was 15K above our first. We'd be happy to hear a counter to our last offer of $325 and if they want to give us the absolute lowest price they'd be willing to sell for then we'd be happy to consider it." I.E. we don't give them a number at all but rather flip the conversation to try and get them to submit a counter and maybe find out what their lowest # is.

What do you think?