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I’m often asked by people who like to prey on others how to buy real estate in a
2 e; ?5 a1 t' qfalling market, like this one. The danger of doing so is that you buy before the
& {2 {5 u& f/ H. {, Kbottom arrives, and take a capital gains hit. The advantage is you hold absolutely all 4 S/ Y' b6 y: }
the cards, and can strike a great deal while the victim-seller is writhing in pain and
5 J: s# a2 V+ z( U2 P. k: w3 c) W, Dbegging for mercy. That’s the fun part.
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/ H* z. Y/ V4 R0 q5 P# ~So, don’t ask me if it’s time to buy yet, because you won’t like the answer. But if / |1 s; g: _* g: y5 j/ y, [
you want some tips on being a vulture, for when the moment’s right, then clip this $ B4 d3 l1 g1 N' a m; ^. p" P% ~3 {
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
~2 N7 \$ l xproperties listed, and so little sales activity, every offer has to be taken 4 _/ q2 l8 e$ u0 U) i, c
seriously. Only by writing up an offer on your own terms, at your own price, will you
! ?* Z" S$ H3 i, n$ U4 ~! Iget a sign-back showing the true level of desperation you’re dealing with.
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* Always submit the offer with a deposit cheque, which is like putting a shiny lure on
$ o! {9 V6 x) F5 g. \- F% ythe end of your fishing line. However, the offer must stipulate the cheque is not 9 r% W$ `+ N6 m: ^2 k( I+ R
cashable until a firm and binding agreement is reached. So, it means nothing, while
- f6 c- a' `, p6 l! f4 Ahaving a powerful psychological impact.
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* Throw in as many conditions as you want. This will create an offer that is
0 v4 W# M- m, f O( Pcompletely tailored to your needs and wants while providing elements you can remove in
; N0 k) y8 e4 N. S1 |5 Horder to gain things you truly want. So, for example, make the offer conditional on 7 H" n/ P' N! R% ~ b9 c3 Y
the vendors paying all your closing costs, including land transfer tax. While you
6 {5 d! p1 F- R% F3 Xnever expect that to happen, you can remove it during negotiations in order to get 1 X" q8 c/ n0 }0 m4 f
what you do want and expect, which is a bargain price.4 Y) }+ L) o# u. l1 g6 f3 X
' F5 m% y }# Z6 ^- k4 j: G( E* Ditto for conditions giving you time to arrange financing or even to sell another
! p8 i3 \, y" Oproperty – they are both traditional deal-breakers, and the vendor’s agent will know # \1 n5 @: Q7 V" p
that immediately. So, by reluctantly removing them you move far closer to getting that & e$ c1 Z% s6 g) d! W
price.
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* Best, however, to insist on a home inspection. This condition should give you five # x% G z6 h2 c' } t: `8 S
business days to complete the process, and is normally done at the purchaser’s , {7 x; w0 H! x
expense. The reason you want this is because almost all properties need some kind of # V5 k. m$ {& g, S
work done in order to make them perfect, and when you get the inspector’s report you 0 ~0 e7 Q9 s- D8 U/ m' h( o
have leverage to help you drive down the price. Simply get an estimate of the cost of % j5 j( H: H% P
the repairs and ask for the deal to be rewritten with a price reduced by that amount.
: X7 L3 ^+ H% ?5 r7 l8 J: ~1 LSince the vendor knows the condition is entirely for your benefit and the deal will : z6 q& J" m3 |% o; D/ e
die unless you sign a waiver, well, guess what? Vulture.
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2 S- Z; ?* [! p( q$ ^) J j5 P* And remember that the closing date is also an important poker chip to play. Have : u- f5 y* Q; S3 i E/ V
your agent find out what the vendor wants, and then use that to help leverage the 0 H# f2 D0 M. ]
price down. Additionally, you can throw any assets you see around the property into
1 B; Z5 I" s1 V3 S* qyour offer – power tools, appliances, lawn tractor, Harley-Davidson, whatever. The
; o; p3 { M) ?0 {- c. ?more you put in, the more clutter there is for the vendor to wade through, and the
9 S s: M2 H# @+ h! X5 }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 ( p @$ p! X/ U+ S3 n- |/ W f
properties, and then let that fact be known (through your agent) to the vendor? That
2 M- p0 g/ s& w* S# f% pwill add even more pressure to the poor guy, as he tries to figure out what he must do
8 J$ Y! V2 h/ U4 r4 tto save the deal, and give you what you want. This may be cruel and unusual, but just
! r5 e. w! l9 y) M9 X9 rconsider it payback for all those multiple-offer situations greedy vendors placed $ z- u k' B8 ?7 e x
buyers in during the bubble years." Y2 M' L* X5 W& a/ H5 I5 H
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* And, of course, you can make a low-ball offer, get a sign-back, and then just let it
2 n2 ?6 G! H; h/ w$ V4 Jdie. Wait a week and go back in with another one, for the same low price. Odds are you & e' B7 A' Z# t9 d( G( w
will not get the same response this time. The stressed-out vendor may hate you, but * q$ x0 m5 |: ]) _- n, v2 {1 ?
he’ll close. |
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