[MoreCowbell]

First time homebuyer here. If Real Estate negotiations bore you, skip this thread. If you like this sort of thing, read on. I’m still learning about Real Estate and would LOVE to hear some opinions.

We have looked at 40 + apartments, so we have done our research and know the market well. My wife and I found an apartment we loved. The apartment was on the market at $1,150,000. The day after we saw it, we were considering what to do and another bidder stepped up and paid the offer of 1.15. We were upset, and decided, that since that price was agreed upon, but the contract wasn't singed that we would offer 1.16 and see what happened. In the end, the seller stayed with the original buyer. It was the right thing to do, because if I were the original bidder, I wouldn’t have wanted somebody to break a deal with me. I had respect for both parties.

Since we loved the building, we did some research and found a listing for a similar unit in the building. This unit was on the market last year and was since taken off. We figured we would contact the broker and ask if the owner was still interested in selling. We were told the apartment was indeed for sale (they were in the process of re-listing it). We saw the apartment and loved it.

Now, this unit was slightly more desirable as it is a corner unit, 4 floors higher, with wide open city and bridge views and 2 full baths versus 1.5 in the other one. Additionally, this unit includes a fifty-foot (10x5) storage bin, while the previous unit did not. This listing had an asking price at 1.25, which even the broker admitted was crazy.

We decided that we would pay up 1.185 and that the 35k premium over the other unit was fair. We then decided, to leave ourselves some bargaining room, we would offer 1.165. In addition, because the current owner did not buy another place yet, or have a plan, that we would offer a delayed closing.

So, we submitted the bid and waited. About 48 hours later (yesterday), the owner counter-offered at 1.245. This was ludicrous.

He also communicated, through his broker, that the storage bin was worth 15k and could be sold for 15k to another owner in the Condo. We don’t deny that the other bins have sold for 15k, it’s public record, but we are unsure how easy this would be to do.

We were ready to give up, and really thought that his 1.245 counter-offer was a simple indication that the owner just wanted to sell if he could get somebody to overpay, otherwise would just stay put. The broker (by the way, the broker is HIS broker, I do not have one) seemed to think that a “Best and Final” bid of 1.2 might have a “shot” of being accepted.

I STILL think the apartment is worth 1.185(based on comps and other factors). I told the broker that my father was actually a licensed broker (he was a builder, so he’s had his license for a long time) and if he wanted to make a sale, he could co-broke with my father (my father would turn the fee over to me) and that would help me to sweeten my deal. He agreed to shave 12.5k off of his fee to the seller (this is great because it alleviates the tax I’d have to have paid on the income).

The issue remaining in preparing my final bid was still the storage bin, which I did not feel would be easy to sell at 15k and wasn’t worth the premium. My thoughts were this: if the seller is so sure that he can sell the bin for 15k(it has a separate deed) that he should do it himself.

So, this morning we submitted a “Best and Final” bid. He is what it I offered:

-Increased purchase price by $20,000 to 1.185.
-The fee he would owe to his broker will be reduced by $12,500(seller’s net increases 12.5k)
-We will grant a “sellers option” to sell the storage bin, on the closing date, in a separate transaction, to me for $7500. In essence, what I have given him is the contract?closing period to attempt to sell the bin himself for the full 15k. If he can’t, he can still sell it to me at end for $7500. We think this a fair compromise.

If you add the three items above together, this increases our bid by $40,000 or $47,500 depending on whether or not he exercises the option on the bin.

We are now waiting for a response. Do you think we did the right thing? Was my offer fair? How might he react?

Thanks in advance.