A retrade is a buyer’s request to lower the price, or change other terms, after the buyer and seller have agreed on a deal. It usually happens during due diligence, after the purchase agreement is signed and before the buyer’s deposit goes firm.
When it happens
Most purchase agreements give the buyer a diligence period, often 30 to 60 days. During that period the buyer can walk away and get its deposit back. That right to walk away is what gives a retrade its force. Once the deposit is non-refundable, the buyer has far less leverage to ask for changes.
Worked example
A buyer agrees to pay $19,500,000 for a 120-unit apartment property. During diligence, the property condition report finds the roof has 2 years of life left, not the 10 years shown in the seller’s capital plan. Replacing it will cost $360,000.
The buyer asks for a $360,000 price reduction, or a credit for the same amount at closing. The seller can agree to some or all of it, or refuse and let the buyer walk. Most sellers expect to negotiate a retrade like this, because it’s based on something the buyer couldn’t have known from the offering materials.
Now consider a second request on the same deal. The buyer asks for a large price cut because property taxes will be reassessed at the new sale price, which will reduce NOI. But the current tax bill was public, and the reassessment was predictable before the buyer bid. The buyer should have priced it into the original offer. A broker will read this as a buyer that bid high to win the deal and planned to negotiate the price down later.
What it means in practice
Not every retrade is a problem. Diligence exists to uncover issues that aren’t visible in the offering materials, and sellers expect to adjust the price when a legitimate one turns up. What brokers pay attention to is the basis for the request: did the buyer find something new, or is it asking for a discount it should have built into its bid? Buyers who retrade on information they already had build a reputation for it, and brokers call them less often on future deals.
For buyers, the way to avoid that reputation is to price in everything you could have known before you bid. Start with the seller’s T12 and adjust it to reflect your ownership. Remove one-time income and expenses, and reset property taxes, insurance and management fees to what you’ll actually pay. Then check the rent roll and lease terms in the OM against those numbers, and set your price on the NOI that’s left. If you later need to retrade, it will be over something diligence uncovered, and the seller and broker will take the request seriously.
Altrio extracts the data from every OM you receive, including the T12 and rent roll, and saves it to the deal. When diligence turns up a problem, you can pull up the seller’s original figures and confirm whether the issue was disclosed. If it wasn’t, you can point the seller to exactly what changed since you bid.
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Frequently asked questions
What does retrade mean in real estate?
A retrade is a renegotiation of an agreed deal, usually a price cut requested by the buyer during due diligence. The buyer typically points to a problem found in diligence, such as building condition, lease terms, environmental issues, or income that doesn’t match the seller’s figures.
Is retrading legal?
Yes. A retrade is a request, and the seller can refuse it. During the diligence period the buyer can usually terminate and recover its deposit, which is what makes the request credible.
How do sellers protect themselves against a retrade?
They disclose known issues up front and order their own inspections before the property goes to market. Their brokers also steer them toward buyers with a track record of closing on agreed terms.