Posted by Gary-Ore on December 26, 2006 at 20:43:19:
If you offer the seller’s asking price (you probably won’t), but I will give the numbers based on this. The seller will carry 15% or $140,700 in the form of a 2nd secured by the property. If the seller;s numbers turn out to be inaccurate, your reliance on his numbers has caused you damages. Had you been given the correct numbers, what price would you have paid? Perhaps 20K less for the property (I don’t know how you are calculating the value so you will need to determine what the loss is based on -a formula that you and the seller can agree to).
If your valuation formula determines that the property was actually worth 20K less than you purchased it for, but because you relied on the sellers inaccurate numbers you paid too much, this is where you will have the right to set-off this 20K from the $140,700. note due the seller reducing this note to $120,700. (and your payments would be adjusted accordingly).
Now, the seller will ofcourse not be inclined to go along w/ this. So, you will need to convince him that you are only willing to pay his price (whatever you agree to), based on his numbers. If he provides you with accurate numbers he will have nothing to worry about.
You can anticipate that he will argue that your numbers will be different than his numbers based on your own unique ability to manage the property. This is an accurate argument, but assuming you have the ability to manage the property and control your expenses you should get at least the same result as he did. Try to put this burden on him to provide you with accurate numbers. If he is not inclined to go along with this, suggest that it is perhaps that he is not providing you with true numbers and that the value should actually be less.
I would suggest that the sellers numbers are almost never accurate. Count on less income, more expenses, greater vacancy factor, and do not “buy into” his rosy optimistic scenarios.
LOL and God Bless!