Need Urgent Advice - Complex Situation with Duplex Offer

[Daniel Mease]

Hello BiggerPockets Community,

I'm in a predicament regarding a duplex offer, and I'm in dire need of advice and insights from experienced investors like you.

I recently placed an offer on a duplex from the 1900s, which I believed had been on the market for over 45 days. However, it turns out there was a previous offer that fell through due to a septic tank issue. The inspection revealed cracks in the septic tank, which is undersized by code for the 4-bedroom duplex. As a result, the city now mandates switching the duplex to the city sewer system. Initially, the seller agreed to cover the costs of septic system decommissioning and sewer connection, which sounded great.

The seller's agent contacted my agent late last night to inform us that our offer had been accepted. This morning, before heading to my W2 job, I contacted some local electricians and building inspectors to assess the situation. One electrician, who had been part of a previous inspection, got back to me and provided an estimate for fixing electrical issues, including addressing the knob and tube wiring. Then things took a surprising turn when, while processing this information, my agent informed me that our offer wasn't the only one accepted; it was one of six that the seller accepted simultaneously.

Here's where it gets even more complicated: the seller's agent suddenly dumped due diligence from two years ago, the last time the duplex was sold, and from a few weeks ago, on us. They expressed concerns about accepting an offer, undergoing inspections, discovering more issues, and the buyer backing out, similar to their last experience. They've given us a tight deadline to respond tonight.

The issue I'm facing is that the electrician's quote to address the problems from two years ago is significantly lower than I received today. This price difference is primarily due to the increased costs of materials and labor since the end of the COVID-19 pandemic. I suspect this may have been intentional on the seller's part to limit my ability to obtain current quotes before tonight's deadline, as I don't have access to the duplex for an inspector to assess the situation.

Based on the inspection report, my revised estimates of the work indicate that the property's cash-on-cash return would drop from 25% to 17%. While it's still a good deal, the upfront costs are considerably higher than I initially anticipated, especially since the seller is backing out of covering the costs of septic system decommissioning and sewer connection.

I'm at a crossroads and unsure of the best course of action. Should I proceed with my offer, requesting credits based on the higher quote, or should I reconsider my offer altogether? Your insights and advice on navigating this complex situation would be greatly appreciated.

Thank you for taking the time to read about my dilemma, and I look forward to hearing your thoughts.

[Bob Stevens]

Get it for less or walk away, why stress. Get another deal.

Good luck 

[Chris Seveney]

Quote from @Daniel Mease:

Hello BiggerPockets Community,

I'm in a predicament regarding a duplex offer, and I'm in dire need of advice and insights from experienced investors like you.

I recently placed an offer on a duplex from the 1900s, which I believed had been on the market for over 45 days. However, it turns out there was a previous offer that fell through due to a septic tank issue. The inspection revealed cracks in the septic tank, which is undersized by code for the 4-bedroom duplex. As a result, the city now mandates switching the duplex to the city sewer system. Initially, the seller agreed to cover the costs of septic system decommissioning and sewer connection, which sounded great.

The seller's agent contacted my agent late last night to inform us that our offer had been accepted. This morning, before heading to my W2 job, I contacted some local electricians and building inspectors to assess the situation. One electrician, who had been part of a previous inspection, got back to me and provided an estimate for fixing electrical issues, including addressing the knob and tube wiring. Then things took a surprising turn when, while processing this information, my agent informed me that our offer wasn't the only one accepted; it was one of six that the seller accepted simultaneously.

Here's where it gets even more complicated: the seller's agent suddenly dumped due diligence from two years ago, the last time the duplex was sold, and from a few weeks ago, on us. They expressed concerns about accepting an offer, undergoing inspections, discovering more issues, and the buyer backing out, similar to their last experience. They've given us a tight deadline to respond tonight.

The issue I'm facing is that the electrician's quote to address the problems from two years ago is significantly lower than I received today. This price difference is primarily due to the increased costs of materials and labor since the end of the COVID-19 pandemic. I suspect this may have been intentional on the seller's part to limit my ability to obtain current quotes before tonight's deadline, as I don't have access to the duplex for an inspector to assess the situation.

Based on the inspection report, my revised estimates of the work indicate that the property's cash-on-cash return would drop from 25% to 17%. While it's still a good deal, the upfront costs are considerably higher than I initially anticipated, especially since the seller is backing out of covering the costs of septic system decommissioning and sewer connection.

I'm at a crossroads and unsure of the best course of action. Should I proceed with my offer, requesting credits based on the higher quote, or should I reconsider my offer altogether? Your insights and advice on navigating this complex situation would be greatly appreciated.

Thank you for taking the time to read about my dilemma, and I look forward to hearing your thoughts.

 if the sellers agent accepted six offers then they are completely unprofessional and do not bother with this property. It also seems like it needs a ton of work and not for the faint of heart. Move along. 

[Daniel Mease]

Logically, I agree, but this is my debut deal, my inaugural offer, and much like your first attempt at assembling IKEA furniture, it's tough to abandon!

[Benjamin Aaker]

They can't accept more than one offer simultaneously. Talk to your agent to see what was actually signed. It sounds like they are trying to manufacture some urgency and goad you into making a bad decision. The fact that they are pushing you to decide by tonight shows their fear of having you find out whatever extra problem is present. You really need to communicate with your agent about the actual status of your offer before doing anything else. Assuming you have an inspection contingency, you can still move forward, but be prepared to spend some money on inspections and be prepared to back out when you ask for concessions that the seller won't want to make. 

[Daniel Mease]

We were told last night that the offer was accepted. The seller's agent contacted my buyer's representative late last night to verbally convey that our offer had been accepted. At that moment, no formal agreement had been signed, and all the necessary paperwork was set to be processed today. In good faith, I began reaching out to various individuals, only to discover that the offer had yet to be officially accepted; they were still deliberating. Surprisingly, our offer was the strongest, so I may have offered too much. Furthermore, I received an outdated data report, possibly, in my current opinion, in an attempt to pass me a fast one by me.

As a side note, my wife believes I might be overestimating the expenses of addressing the concerns raised in the previous inspector's report and that I could be mistaken about the entire situation.

[V.G Jason]

You seem too emotional about this. Nothing is accepted until you got a signed offer.

What are New York rules with backing out before inspection/earnest? If they are limited, then tell them your offer is rescinded and move on. If they give you an opportunity to negotiate before your EMD is gone for good, re-adjust the price once the offer is officially accepted or walk away.

You're making this way more complicated than it should be. Your options are already in front of you, you seem to want to make this work when the signs tell you otherwise. Do what's being done in front of you.

[Daniel Mease]

And now this: My buyer's agent just informed me there are more showings tomorrow. 

[Carlos Ptriawan]

is this first time buying home ?

[Alecia Loveless]

@Daniel Mease Either they signed your offer and formally accepted it or they did not. DO NOT LET THEM FORE YOU INTO RUSHING YOUR INSPECTION PERIOD.

This is the time you get to cover your rear end to make sure you won’t get stuck for hundreds of thousands of dollars worth of work that you were not expecting.

The seller knows they have a problem and are trying to rush you.

There’s other deals. If they won’t give you 10-14 days to inspect walk away.

[Bob Stevens]

Quote from @Daniel Mease:

Logically, I agree, but this is my debut deal, my inaugural offer, and much like your first attempt at assembling IKEA furniture, it's tough to abandon!

 KEEP EMOTIONS OUT OF IT! :)  Move on, get another, 

[Samuel Eddinger]

@Daniel Mease - I think I probably know the property as I was looking at it as well.  You should ask your agent and they should talk to their broker about this as it does seem to be unethical.  With that said, until a contract is signed by both parties and consideration has been provided (your earnest money deposit), it is not a valid contract.  I wouldn't do anything in your case until your contract is signed.

Happy to talk more about this.  DM me if interested.

[Bob Stevens]

Quote from @Daniel Mease:

And now this: My buyer's agent just informed me there are more showings tomorrow. 

 WALK AWAY, Why are you still bothering with this deal?

[Daniel Mease]

Hello BiggerPockets Community,

I wanted to provide a closing update to those following our duplex purchase saga. We are officially moving forward with the purchase, and I must say, it's been an unusual journey.

After a series of twists and turns, we have successfully negotiated credits for several health and safety issues identified by the previous buyer's inspector, which need addressing. This aspect of the deal was essential to us, and receiving these credits feels like a significant win.

Moreover, the negotiation process brought our signed offer down to the price I initially had in mind before my wife and agent persuaded me to increase our bid. This turn of events has left me feeling quite content with the outcome despite the rollercoaster of emotions and challenges presented by the seller and their agent.

The entire process was fraught with unexpected developments and demands from the seller's side, but perseverance and negotiation have paid off. We are now moving forward to take ownership of a property that meets our investment criteria and aligns with our initial financial expectations.

To those who provided advice, shared their thoughts, or followed along, thank you for your support and encouragement. Your insights have been invaluable, and this experience has taught me a great deal about the complexities of real estate transactions, the importance of steadfast negotiation, and the value of patience.

We are excited to move forward with this duplex and are eager to tackle the challenges and opportunities that come with it. Remember that persistence and clear communication are essential for anyone embarking on a similar journey. 

Thank you, BiggerPockets community, for being a part of our journey. I look forward to sharing updates and learning from this vibrant community as we move on to the next chapter of our real estate investment journey.

[Samuel Eddinger]

Quote from @Daniel Mease:

Hello BiggerPockets Community,

I wanted to provide a closing update to those following our duplex purchase saga. We are officially moving forward with the purchase, and I must say, it's been an unusual journey.

After a series of twists and turns, we have successfully negotiated credits for several health and safety issues identified by the previous buyer's inspector, which need addressing. This aspect of the deal was essential to us, and receiving these credits feels like a significant win.

Moreover, the negotiation process brought our signed offer down to the price I initially had in mind before my wife and agent persuaded me to increase our bid. This turn of events has left me feeling quite content with the outcome despite the rollercoaster of emotions and challenges presented by the seller and their agent.

The entire process was fraught with unexpected developments and demands from the seller's side, but perseverance and negotiation have paid off. We are now moving forward to take ownership of a property that meets our investment criteria and aligns with our initial financial expectations.

To those who provided advice, shared their thoughts, or followed along, thank you for your support and encouragement. Your insights have been invaluable, and this experience has taught me a great deal about the complexities of real estate transactions, the importance of steadfast negotiation, and the value of patience.

We are excited to move forward with this duplex and are eager to tackle the challenges and opportunities that come with it. Remember that persistence and clear communication are essential for anyone embarking on a similar journey. 

Thank you, BiggerPockets community, for being a part of our journey. I look forward to sharing updates and learning from this vibrant community as we move on to the next chapter of our real estate investment journey.

Congratulations!