Seller's counter-offer. I really hate the terms!

[Amanda Lee]

Hi guys,

this is my first ever post to BiggerPockets. I want to say I love this site, the podcasts, and all the great advice.

So, I'm trying to purchase my first investment property. I'm really excited to have found a 2 family that isn't a piece of junk and just needs some cosmetic touch. so here's the deal. I made an offer, which I thought was extremely fair for both us and the seller, and the seller's counter offer sucks! I gave him an offer based on the comps in the area but I'm just really boggled at his terms.

(keep in mind this is seller financing)

Here's my offer:
Selling Price: 20,000 (It's in an up and coming area in Virginia)
Down Payment: 5,000
Interest: 5%
Duration: 5 years

Seller's counter-offer
Selling price: 22,000
Down payment: 10,000
Interest: 5%
Duration: 5 years
CREDIT REPORT (my credit is good and I have plenty of disposable income each month)
$500 of warranty (which is $640 yearly)

My OBVIOUS or OBLIVIOUS (haha) questions are:

1. My deal makes him more money, WHY is he asking for 10K?
2. if I had 10k to put down, I could buy a WAY better property in the area, is he insane?
3. How do I negotiate the down payment to be lower and get him to accept my terms? We are communicating through our realtors.

A little about the house:
2 family, as stated earlier
Kitchen: no stove, no oven, needs complete update, it's hideous
PAINTED HARDWOOD FLOORS. UGLY.
horrible paint job overall
no heating system. gas heater was taken out (which makes me wonder, because it's not foreclosed)

I have not yet had the inspection done but I have an AWESOME inspector who will rip this place apart (figuratively) if I tell him to give me every detail to deduct from the selling price.

A little about me:

1. was just approved for a $15K line of credit I was going to use as a reserve to pay for updates and appliances (I want to pay most out of pocket though)

2. 5K to put down.

3. another property I want on the same street is 9,000, needs about 25k in repairs, but is really nice, but one family. My partner and I like that one too and were considering tapping into the line of credit to pay for it.

Please help me guys. This has the potential to be my first baby. I have dreamt about investing in property since I was a little girl. I don't want to give this 10,000 AND my credit report!