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I’m often asked by people who like to prey on others how to buy real estate in a 4 `4 u+ p0 ~$ m- q7 t; |
falling market, like this one. The danger of doing so is that you buy before the " e( E' n6 R# U9 P$ U
bottom arrives, and take a capital gains hit. The advantage is you hold absolutely all 5 [! p3 h$ H" a1 f1 a
the cards, and can strike a great deal while the victim-seller is writhing in pain and ' Q+ Q' p: z2 h, p0 g& O
begging for mercy. That’s the fun part., U4 Z" ?( A t$ t. _+ B
3 F# F$ A! L! J/ y8 d/ t6 o9 mSo, don’t ask me if it’s time to buy yet, because you won’t like the answer. But if ! t. V5 ?- B, O6 a3 M
you want some tips on being a vulture, for when the moment’s right, then clip this
" t6 L- Q. T: F2 Zand 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
% c# S' [6 X9 r# w) e2 Wproperties listed, and so little sales activity, every offer has to be taken
, t6 f" C3 _! eseriously. Only by writing up an offer on your own terms, at your own price, will you 5 Y- q5 E- N) b, {6 [8 D! s6 o C
get a sign-back showing the true level of desperation you’re dealing with.
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! {( d; t% X8 I# K, n( F5 h* Always submit the offer with a deposit cheque, which is like putting a shiny lure on
+ y' y& R& u9 b: o; ?5 ?9 othe end of your fishing line. However, the offer must stipulate the cheque is not
: f& e1 a$ G7 f: ]6 v. r5 [; P: \cashable until a firm and binding agreement is reached. So, it means nothing, while " i; l. I3 G9 I" v! g
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) N1 S0 V+ e2 ~
completely tailored to your needs and wants while providing elements you can remove in
6 |1 J5 e' c- ]7 horder to gain things you truly want. So, for example, make the offer conditional on * I% N, V, S5 S8 D. \; P( i
the vendors paying all your closing costs, including land transfer tax. While you
$ C T5 P8 J% ?5 u/ ]1 J! I! E3 N/ ~never expect that to happen, you can remove it during negotiations in order to get
4 n# K5 ^/ [) ]+ Fwhat you do want and expect, which is a bargain price.: W, _2 T! { ]5 {* n# w
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* Ditto for conditions giving you time to arrange financing or even to sell another
" {% v+ y2 e E; |. [# H$ \ ?property – they are both traditional deal-breakers, and the vendor’s agent will know
2 C! }* x4 r8 Qthat immediately. So, by reluctantly removing them you move far closer to getting that ; `$ V, h3 B; E& Z6 g9 \
price.
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* Best, however, to insist on a home inspection. This condition should give you five
8 l1 A# V8 k! [0 q8 xbusiness days to complete the process, and is normally done at the purchaser’s
' F* D/ g& _! Y( wexpense. The reason you want this is because almost all properties need some kind of . U; i* p1 q1 N) E# ]* z, C$ T& z
work done in order to make them perfect, and when you get the inspector’s report you 4 ~# U1 ?8 {( \" g# ^+ s6 s
have leverage to help you drive down the price. Simply get an estimate of the cost of ) L9 j: R i/ @2 Z ^# `# E
the repairs and ask for the deal to be rewritten with a price reduced by that amount. 8 _0 I3 q3 C$ k7 I6 a, y6 c. X
Since the vendor knows the condition is entirely for your benefit and the deal will 0 ]5 @/ P6 Z0 f5 b
die unless you sign a waiver, well, guess what? Vulture.) H$ r6 E2 Y6 e; p
" {; `6 ~# U: r2 P! b0 X* And remember that the closing date is also an important poker chip to play. Have
0 z3 c. E5 ?0 ^0 b9 E/ ayour agent find out what the vendor wants, and then use that to help leverage the
8 b! }+ N1 S( a3 V+ Cprice down. Additionally, you can throw any assets you see around the property into 3 B* S/ F% x( r4 x' S2 e" X4 B
your offer – power tools, appliances, lawn tractor, Harley-Davidson, whatever. The + i/ ~& X# ? o" s5 z( S* w0 P1 ?6 @
more you put in, the more clutter there is for the vendor to wade through, and the
* I* V$ y' w% Ybetter chance you have of securing the best deal.; K5 T( j# ^ m' x' G7 ?+ G: F
5 a) g- C9 p/ Q; \: [' _$ U* Speaking of which, why not make two offers at the same time on two competing / q6 l; P& ^8 B7 D: A8 O
properties, and then let that fact be known (through your agent) to the vendor? That " _: }) @5 B3 Z7 O* c3 H! W
will add even more pressure to the poor guy, as he tries to figure out what he must do ' C* m8 y- V$ j* N) ~1 b) C8 k# t
to save the deal, and give you what you want. This may be cruel and unusual, but just
! p# f9 {. A/ O% a% Fconsider it payback for all those multiple-offer situations greedy vendors placed
: r+ [* z4 ~- X6 @7 G2 xbuyers in during the bubble years.! A, n3 w b8 r* d
2 w' ?$ C/ O' S6 N n* k3 m" _% o. k* And, of course, you can make a low-ball offer, get a sign-back, and then just let it
0 [. o6 [0 ^0 m. hdie. Wait a week and go back in with another one, for the same low price. Odds are you . P2 s3 ]) d: R8 m; e8 K
will not get the same response this time. The stressed-out vendor may hate you, but
( x* v8 _; L# f+ r( k$ D1 yhe’ll close. |
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