documents to be disclosed for Multi-family home property

General Real Estate Investing
1

Hello all,

I have searched all over the internet and I can’t find an answer for this question.
I am looking at a multi-family home ( 4 unit) and I asked my real estate agent to ask the seller for the schedule E tax for for last year plus receipts for utilities and more information on maintenance expenses.

My realtor says I can’t ask for any of these documents until I put in an offer. I think I should be able to ask for these papers BEFORE I make an offer so I can make a more educated offer.
Can anyone tell me who is right? And anything you know about researching a house before you put in an offer.

2

We’ve made our offers on 4plexes based on Average Rental Income, projected GSI and projected Cost Analysis. When we make the offer, we include the line: Due Diligence to Extend 10 days after Reciept of: x, y, z. During the DD timeframe you can walk away from the deal, and recieve your Earnest Money Back.

Then During the DD Timeframe, every time we submit a counter to the Sellor, we extend the DD.

3

Ashon,

This is good information for someone looking to purchase multi-family properties. Thanks.

4

Getting the Schedule E is not the first thing you need. The GSI and the actual operating numbers are.

Once you’ve got the purchase offer signed and agreed to, then it’s time to do your due diligence. This is also the time you renegotiate the price, based on the information the seller tried to keep you from seeing in the first place.

Plus you don’t want or need to waste time doing due diligence on property you don’t have a contract on.

Now, that doesn’t mean you don’t try to ask the seller a lot of questions before you make an offer, so that you can see how to tailor an offer that will work for the seller; assuming you’re attempting some creative financing. If not, then just make an offer that YOU can’t refuse, and then start negotiating once you’ve got the seller engaged in a counter. Sellers will naturally have to justify their price with a counter, won’t they? And so that’s the time they cough up the actual numbers.

My negotiating doesn’t start until after I get a contract signed (as a buyer).

Also, I’ve been known to give the seller 10 days to provide ‘x’ documents, and then I’ve got 10 days to approve of same, or this contract is null and void and all monies to be returned in full.

Do sellers always accept this? No, but it then becomes a negotiation. However, I’ve given the seller 1/3 of a month to cough up details about his property, so I want 1/3 of a month to analyze them. It’s only fair. I don’t always want that much time, but it’s there.

What’s this actually mean? This means that if the seller is slow giving me documents, it gives me that much more time to get my act together without endangering my earnest deposit. Actually earnest deposits just show our ‘earnestness’ about buying, but no court will award the deposit to the seller in practically any case.

In law, the seller ‘has to sell’, but the buyer does ‘not’ have to buy. So the earnest deposit deal is pretty much geared to the Buyer’s benefit, not the sellers. Now…the time it takes getting it back, is another story. But getting it back is not.

Forget requiring the Schedule E, unless its part of your negotiating scheme.

IE: I’ll give up the request for the Schedule E in advance, if you’re willing to repave the parking lot prior to closing. (OK, that’s a ridiculous trade off, but it makes your first request seem tame by comparison, doesn’t it?) Would I do this? In a verbal negotiation, why not? It keeps the ball rolling, and it sets the tone that if the seller doesn’t agree to the first request, they get worse, not better.

5

Just like the Old Man negotiating on Pawn Stars. If you don’t like his offer, he’ll drop the price.

6

If we’re using “pawn star” style negotiating on real estate, we’re screwed like a ‘something’ I can’t mention.

That’s ‘garage sale’ negotiation, that is completely focused on the price. I don’t think that’s good enough for us.

I’ll introduce all sorts of other things to negotiate on, besides the price, when I negotiate ‘price’.

Unlike Pawn Stars, I add in extras that I do/don’t want. I’ve seen Pawn Star customers actually do this much. One customer of theirs asked for, and got, a credit against other merchandise, plus the price he was offered. So, he didn’t focus only on price, but stirred the pot and got away from the standard .50 cents on the dollar offers that Pawn Star typically makes. Of course Pawn Star has a 100% mark up on the ‘credited’ merchandise, too, so it wasn’t a hard hit to give this guy credit on other merchandise.

I’ve learned to ask for furniture, cars, appliances and whatever I happen to be in the mood to ask for, to be included in the price. I learned this from Carleton Sheets of all people. He negotiated the purchase price to include the entire house full of furniture on a house he was buying to live in.

One of the arguments he used, was suggesting to the seller that he bought all this furniture to fit ‘this house’ and not only will he be moving all this ‘used furniture’ to his new house, but he’s effectively paying for a lot of it twice; and it won’t even fit the decor, or personality, of his new digs.’ I supposed the thought of spending five thousand more dollars on ‘used furniture’ for his new house, was all it took to say, “You can have all my old, used furniture.” Yay.

Meantime, I try to let the seller work me over, until I get the price I actually want (with some goodies thrown in). But I rarely negotiate on price alone. That’s really bad form, if not potentially leaving all sorts of money on the table, and/or failing to help the seller feel satisfied that the equity stripping I did on him was all he could hope for.

Sellers want/need satisfaction in the negotiations, and so I help them to feel good about the sheering I did on them. (Happy baa-aaa, baa-aaa, baa-aaa…) :evil

Of course if the seller pulls that on me, I respect his negotiating position, but it might also tell me that I’m dealing with an unmotivated seller. Of course that’s 90% of the sellers, so it goes with the territory.

If I go any further I’m fearful of hijacking this thread.