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I’m often asked by people who like to prey on others how to buy real estate in a
3 M; O- T( s! J! }; Wfalling market, like this one. The danger of doing so is that you buy before the
! l2 r8 s1 V, Z! \( W- l Kbottom arrives, and take a capital gains hit. The advantage is you hold absolutely all ; |: j, k4 M P7 _4 N; M
the cards, and can strike a great deal while the victim-seller is writhing in pain and
8 P7 G! r$ x" R! wbegging for mercy. That’s the fun part.
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; b4 Y/ g7 n; D' Y1 I/ [/ jSo, don’t ask me if it’s time to buy yet, because you won’t like the answer. But if $ ]9 a: f5 y L
you want some tips on being a vulture, for when the moment’s right, then clip this ; n4 c) _3 i n1 K, f" m
and stick it on the fridge. (By the way, this is another preview of my coming book.)
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* Offer what you want to pay, not what the vendor is asking to be paid. With so many $ F T( ~* C8 @5 F* x
properties listed, and so little sales activity, every offer has to be taken
5 I- ]! m( q. ?2 ~1 K: m& dseriously. Only by writing up an offer on your own terms, at your own price, will you % a- K6 M3 Q e* O
get a sign-back showing the true level of desperation you’re dealing with.7 k' o* c+ r# @: w' E
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* Always submit the offer with a deposit cheque, which is like putting a shiny lure on 0 |; L3 `2 K1 D9 b& O
the end of your fishing line. However, the offer must stipulate the cheque is not % |& P; H% t; C# ?
cashable until a firm and binding agreement is reached. So, it means nothing, while ( B( y+ v2 i' W$ U- ~+ G4 b8 ?
having a powerful psychological impact.
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* Throw in as many conditions as you want. This will create an offer that is ( k: h5 F- B' m: D+ t t
completely tailored to your needs and wants while providing elements you can remove in 8 D# g( M, n2 R) ]! f4 A1 {
order to gain things you truly want. So, for example, make the offer conditional on
9 J& T M1 Z3 hthe vendors paying all your closing costs, including land transfer tax. While you 2 v+ Z. w% ?7 J
never expect that to happen, you can remove it during negotiations in order to get ( X8 h. z! ?/ ^( R
what you do want and expect, which is a bargain price.2 t- h k; i8 W1 o7 D Z8 g
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* Ditto for conditions giving you time to arrange financing or even to sell another 2 l# `$ U# \% C7 |7 V0 G- e5 q
property – they are both traditional deal-breakers, and the vendor’s agent will know
& F/ W0 r! h: a6 ?/ A+ D0 f! hthat immediately. So, by reluctantly removing them you move far closer to getting that ) _* b7 M% G! x; P. p# o
price.8 z5 g# H0 T, f z
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* Best, however, to insist on a home inspection. This condition should give you five ) A& ? {4 ^( x! x6 z! M. p
business days to complete the process, and is normally done at the purchaser’s 5 X* o, F; V4 V) h/ b, C9 B" g0 L2 H0 c
expense. The reason you want this is because almost all properties need some kind of
7 R! L# s* H$ B; k2 ~8 O" K3 Kwork done in order to make them perfect, and when you get the inspector’s report you
4 e6 U/ B( R" F, ihave leverage to help you drive down the price. Simply get an estimate of the cost of + e* |% L( t7 S3 x7 [: `( q
the repairs and ask for the deal to be rewritten with a price reduced by that amount. 5 R% h/ ?' @& O& J- @1 x0 _4 Q
Since the vendor knows the condition is entirely for your benefit and the deal will
v5 \5 g3 H& W8 K! A; ^) ldie unless you sign a waiver, well, guess what? Vulture.
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* And remember that the closing date is also an important poker chip to play. Have ) u6 e- E% ~- ~: \6 X
your agent find out what the vendor wants, and then use that to help leverage the
3 ~, C4 z/ J$ i% Dprice down. Additionally, you can throw any assets you see around the property into ; Z; x( W' n; k% i
your offer – power tools, appliances, lawn tractor, Harley-Davidson, whatever. The
% u$ n r$ b9 o+ T( a5 Bmore you put in, the more clutter there is for the vendor to wade through, and the ) |6 N) W# d1 P' f( N
better chance you have of securing the best deal.
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* Speaking of which, why not make two offers at the same time on two competing
/ K/ V4 _: W; O6 Dproperties, and then let that fact be known (through your agent) to the vendor? That & T$ M7 h7 g& e* J5 A
will add even more pressure to the poor guy, as he tries to figure out what he must do ) L! y- G( ?( i# t) s
to save the deal, and give you what you want. This may be cruel and unusual, but just
6 J+ t- }" G. R& }consider it payback for all those multiple-offer situations greedy vendors placed . E8 I4 j; O& i C* ]
buyers in during the bubble years.( ?% C4 B1 M* E& P9 f8 Z* ?
' N( f8 z m$ w5 p* And, of course, you can make a low-ball offer, get a sign-back, and then just let it ) b8 t# N' X1 C9 ~& |# ^+ B7 f
die. Wait a week and go back in with another one, for the same low price. Odds are you
+ v, n1 H, C) Y* S5 w5 J1 _will not get the same response this time. The stressed-out vendor may hate you, but
( {3 O! ?6 d, r2 ~9 [he’ll close. |
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