Negotiations on Your Rehab
You offered $15,000 less than list price ($275K) and provided the reasons behind it. You think it is overpriced considering the other homes in the area. The other homes have nice update/upgrades and you know this one is in need of some updating/upgrading. You are thinking the rehab of the home will take around $35k-$40k. You have been counseled by your Realtor® that you probably could Not expect the seller to pay for your entire Rehab, so you figured it would take $15k to get it in acceptable shape. You would look at the other $20k-$25k as your own updating/upgrading.
The Selling Agent has the offer and at this time it is the Only Offer. You have put a deadline of 4pm on the day of the offer (giving the Seller a few hours to look over the offer). The Selling Agent comes back and talks to your Realtor® and they have a counter offer. They understand your Offer but feel it is not $15k off of their Selling Price. They counter at $285,000. This is good, as you know the Seller is interested in selling. Now you have to really work with your Realtor® to come up with the next Offer. Do you Stay at your Price, or do you go up a bit? Honestly, if you do Not have any other justification on keeping it at $275k, then you should go up a bit. In this case you have gotten some good advice from your Realtor® and you will put another list of items together showing the seller that your number is quite good considering all these required fixes. You list off:
- Tear out old carpet and replace with laminate or wood - $5000-$7500
- The home does Not have GFCI receptacles installed in any of the bathrooms or kitchen. This is a must have and estimated at $1000-$2500 depending on what the electricians find.
- You are seeing moisture around the foundation of the home caused by a lot of flower beds holding too much water. Landscaping contractor will have to come in and get things changed (maybe add French drains, or simply change the grade of the ground to allow runoff better. (Est…$1500-$2000)
- Like a lot of older homes, this home does Not have gutters. So again runoff issues exist. Add more to the Must Have list.
So you counter back by staying low, as you have instructed your Realtor® to present these Must Fixes. You counter at $276,500. Your Realtor® gives you the feedback from the selling Agent that they understand and give you an idea if the seller will like it or not (in this case, they don’t feel like the seller will go that low).
What will the Seller do…..You never know. You have to take into account a lot of factors and your Realtor® should be able to help you see what “cards the seller is holding” like: Time (how long the home has been on the market), List Price History (has the price been changed), Is the seller living there, or was it investment or home is part of Trust.?
Something else I have to point out in the initial Offer Contract. There are sections that suggest Who will pay Closing Costs and IF a Home Warranty will be provided or not. At this time, I wanted to simply keep the numbers based solely on the Rehab so you could see the basics. I will discuss more of the Offer/Negotiation Process next week. We will see if we can Get This Home Off the Market…!
Gary Buchanan/Realtor® w/AgentOwned Realty - email@example.com 843-647-7743