SFH back on market 5x, how would you structure this deal?

[Evan C.]

OK so there's a 3/2 with about 1300 sq ft next to a local hospital in a bedroom community of Greensboro and Winston-Salem, NC. It's been back on the market 5 times. Seller wants $95k, down from $99.5k. It's been on market nearly 300 days. It works for me at $80k. I think it would rent for at least $800. Problem is, listing agent notes suggest buyer has rejected lowballs before. What sort of offer could be made that allows seller to get (near) list price while reducing the effective price paid to near $80k?

For example, I seem to recall an example given on a BP podcast one time in which the offer was for list price with seller crediting back an amount at closing to reach the buyer's actual required price.

Interesting listing agent notes at the bottom.

Here's my analysis:

Purchase: $80,000
Closing: $6,000
Loan: 25% down, $60,000
Loan rate: 4% conventional 30 yrs 1 pt assumed

Estimated rent: $800
Taxes:$80/month
Insurance: $40/month

Repairs, Vacancy, CapEx all estimated at 5% each, $40/month each, $120 total/month.
Management: 10% or $80/month.

So bottom line:

Gross income: $9600/year
Expenses: $7272/year
Cash flow: $194/month or about 7% CoC ROI depending on how much I renovate. This isn't spectacular but fits my available funding and strategy.

Notes about the property:
-Adjacent to local hospital, so I think vacancies will actually be very low.
-Stucco siding
-Crawlspace foundation
-Fenced yard
- Window unit A/C
-Good interior condition, basic finish but new kitchen, mostly new baths. House was last bought very very cheaply in 2017, so this is like a prolonged flip for the owner.

Listing agent Notes:

NO OWNER FINANCING I believe it will not qualify for FHA due to the type of windows*...Reasons for listing back on the market multiple times for various reasons. #1 lost financing, #2-3 wanted unreasonable repairs in the seller's eyes, #4 was a buyer that couldn't live in a house with lead based paint( even though it was on the outside on a room inaccessible from the inside of the house and seller agreed to remediate), #5 was an investor that wanted to lowball after inspection and never asked for repairs, only a discount.

To me it looks like getting list price is important to seller but there's room to negotiate other details. Part of me says write the offer and he can just say no, but don't want to waste my agent's time. But he can't say yes either if I don't write the offer.

*I don't honestly know what is meant about the windows and FHA financing. Hoping it only applies to owner/occupiers.

[Chris Davidson]

@Evan C. Has your agent given you any advice? I would be trying to get a copy of that inspection report so you can write a reasonable offer. To me, it sounds like the seller isn't motivated to sell. However if you think he just wants it to be shown as selling at his price, ask for him to pay your closing cost, a point or two on your loan, and whatever else you can come up with to get from the asking price to your number. But at the end of the day, you can't make the seller take less than they are willing to.

You have some good info but might need more. What is wrong with the house that is unreasonable or causing such low ball offers on 3 buyers....

Best of luck mate!