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I’m often asked by people who like to prey on others how to buy real estate in a ( D' L8 B: M, r. E6 P
falling market, like this one. The danger of doing so is that you buy before the 8 W2 S2 A0 {$ A" o6 l8 |$ I$ Z: i
bottom arrives, and take a capital gains hit. The advantage is you hold absolutely all
' t0 s l% o% H5 Xthe cards, and can strike a great deal while the victim-seller is writhing in pain and
3 _" F# r. _% F4 Xbegging for mercy. That’s the fun part.
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" r: k: x2 x# bSo, don’t ask me if it’s time to buy yet, because you won’t like the answer. But if ' ~! M4 i/ S9 @+ ~$ }* B+ ?
you want some tips on being a vulture, for when the moment’s right, then clip this
5 m' }9 v0 S* i1 Y5 m* Dand 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
9 t& h4 O/ X8 v: S [properties listed, and so little sales activity, every offer has to be taken * p8 j( E! X( z1 k5 e9 n. g: O9 R4 X
seriously. Only by writing up an offer on your own terms, at your own price, will you
) W9 C4 d# G4 s* Vget a sign-back showing the true level of desperation you’re dealing with.5 b# }! V* V: I% ?$ G
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* Always submit the offer with a deposit cheque, which is like putting a shiny lure on ) B. b$ V6 Z- _- L
the end of your fishing line. However, the offer must stipulate the cheque is not 3 L; C; \+ L7 r
cashable until a firm and binding agreement is reached. So, it means nothing, while
) u3 t! W( \. l, ^' T, _having a powerful psychological impact. T( x: v, j; B! u1 Y: w" {/ N
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* Throw in as many conditions as you want. This will create an offer that is
9 d" e4 J9 ^/ x" U6 I) ecompletely tailored to your needs and wants while providing elements you can remove in 3 D% ]/ \ n0 c8 h
order to gain things you truly want. So, for example, make the offer conditional on
' K" ?1 F# O4 A- B" E1 D$ nthe vendors paying all your closing costs, including land transfer tax. While you
8 b0 a5 f. z; ?2 Rnever expect that to happen, you can remove it during negotiations in order to get ) o& h+ q9 e9 b" D2 D- D- B
what you do want and expect, which is a bargain price.: z! `. \! \( [/ G2 Z
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* Ditto for conditions giving you time to arrange financing or even to sell another , W& S! R; b* y9 V3 F* n3 w& Z
property – they are both traditional deal-breakers, and the vendor’s agent will know # v0 K. o$ d3 n+ y1 g, F
that immediately. So, by reluctantly removing them you move far closer to getting that ' Q" w" [& j) q3 [& B
price.4 S' p2 v( Q+ y
" A6 Q f: o' D }/ c* Best, however, to insist on a home inspection. This condition should give you five
" B) o3 @5 B( @. t/ e0 [business days to complete the process, and is normally done at the purchaser’s + m, ]; C5 y" K- b
expense. The reason you want this is because almost all properties need some kind of 1 t c; X' s; s; i l/ t
work done in order to make them perfect, and when you get the inspector’s report you
2 s, X1 ^3 }, Y; P2 Y- X& zhave leverage to help you drive down the price. Simply get an estimate of the cost of
: R% Z( x0 i" z( J' O; I, E. nthe repairs and ask for the deal to be rewritten with a price reduced by that amount.
) k: l0 E! \+ D3 f0 k4 pSince the vendor knows the condition is entirely for your benefit and the deal will 2 D" W& F. L) u- t3 L: H0 R; J
die unless you sign a waiver, well, guess what? Vulture.# [: O! m) N" q: K# `
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* And remember that the closing date is also an important poker chip to play. Have $ o) F0 c/ o# ^; o
your agent find out what the vendor wants, and then use that to help leverage the % X$ F1 y4 K, `$ U7 e
price down. Additionally, you can throw any assets you see around the property into
% c) s, r( C; I n% P7 `( W: J8 tyour offer – power tools, appliances, lawn tractor, Harley-Davidson, whatever. The 3 E' V& \9 _* i" H2 d, ~$ V
more you put in, the more clutter there is for the vendor to wade through, and the
( A; D% U! n( x$ hbetter 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
9 I- R* l0 y7 p! ~1 c( _3 hproperties, and then let that fact be known (through your agent) to the vendor? That : M' A5 G L& e1 ?, f: M
will add even more pressure to the poor guy, as he tries to figure out what he must do 3 E, I* I! A5 s5 Z2 c
to save the deal, and give you what you want. This may be cruel and unusual, but just
! B) c5 d; y- T! b1 T6 qconsider it payback for all those multiple-offer situations greedy vendors placed 1 O$ ]/ W" C7 V- v, h- F- _- ~9 F
buyers in during the bubble years.
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* And, of course, you can make a low-ball offer, get a sign-back, and then just let it ( r/ l0 k7 I" d) k- G
die. Wait a week and go back in with another one, for the same low price. Odds are you
. [4 D v7 Q5 P1 ?, } Z9 wwill not get the same response this time. The stressed-out vendor may hate you, but ( J5 M" P) S" u y4 O7 f
he’ll close. |
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