Basis for new offer and price

Hi Everyone! I need to go back to seller to negotiate a new price on my first MHP purchase. The individual septic system will need tied into city sewage. Park is 40 years old, tanks are undersized and none working well. Seller has neglected park and septic maintenance for years. Tie in estimates are 50-80K. Location and potential of park is good. 92% occupied, 8 POH (very old), 57 lots total. Rent lot $240. Owner pays water/septic/trash. Offered 1M.
Please advise on these items:

  1. negotiation tool to come down on price for septic tie in?
  2. Park is zoned as commercial business district when it was grandfathered in by the City after annexation so there is no mobile home permits to be had. Park is legal, nonconforming. Is this good enough?
    Thanks in advance for any perspectives/advice on deal.

It helps to share the results and estimates of your diligence (e.g. septic inspector reports, examples of tenant issues, etc) on the septic system with the owner. He needs to know that the systems are failing and that you’ve had multiple experts confirm that the only option is to move to city sewer. Hopefully your estimate also includes the tank decommission and any septic line tear down costs.

Go back to your MHU Due Diligence Manual for reference on the non-conforming item. You will need a certificate of zoning from the city that indicates that the current usage is grandfathered. I would also print a copy of the city ordinances that lay out any specifics regarding grandfathered properties and keep those on file. There are several recent threads on this topic if you search the forum.

Jhutson is correct. One other negotiations tool if you are planning to get bank financing is that most banks will require an appraisal and phase 1. They would want some review of the septic systems. If the report indicates this as an issue, I doubt any bank would lend on this park.