Dealing with a Pre-Foreclosure Seller’s Unrealistic Expectations – Need Advice!I have this pre-foreclosure property in California that I’ve been negotiating with the owner for about two months. He managed to save it from auction and got the auction postponed for 2.5 months. He’s about $60k in arrears, including fees, taxes, and other costs, bringing his total debt to roughly $430k.After months of back-and-forth emails, my agent and I finally managed to view the property. The inside and outside need significant work, essentially a complete gut job. The exterior and yard also require attention. My agent estimated that upgrading a few things—not a complete gut job—would cost around $100k-$120k. For a full rehab, I’m thinking it would be more in the range of $150k-$200k.After the tour, we discussed our intention of a short sale with the seller. However, he started referencing estimated values from sites like Zillow and Redfin, which I believe are way off. They were giving values between $500k-$600k+, based on the property being in good to turnkey condition. No single-family home in this area has sold for more than $565k in the last two years, and those that sold for over $500k were turnkey ready.Seeing these values, the seller’s attitude shifted from wanting to avoid foreclosure to wanting to make a profit. He has now communicated that he’s using a $600k price point (turnkey value) as the basis of his starting point and wants me to make an offer around this value minus the estimated repair costs (i.e., $600k – repair costs = the value he wants to start negotiations at).Additionally, I just found out that two houses down is a halfway house for convicted sex offenders/pedophiles. Given the situation and the necessary repairs, my offer would be between $300k-$350k. I don’t see anyone buying it for more than he owes, considering the work needed and the possibility of buying it cheaper at auction.I should disclose that I’ve been obsessing over this property for the last 2.5 months. It’s for personal use, not an investment. I’m not willing to pay more than he owes, but I’m unsure of my next steps or which way I should go, because I know my offer is probably going to offend him.Open to all advice and opinions
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