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I’m often asked by people who like to prey on others how to buy real estate in a * K1 ?+ J4 b+ N% m7 \
falling market, like this one. The danger of doing so is that you buy before the - M$ L3 `7 y; L6 _
bottom arrives, and take a capital gains hit. The advantage is you hold absolutely all
9 Q$ K. q8 I3 I$ @4 S, Othe cards, and can strike a great deal while the victim-seller is writhing in pain and % |/ c, g9 w9 i& {' ~* k
begging for mercy. That’s the fun part.
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! ?7 y) R6 U3 U4 \So, don’t ask me if it’s time to buy yet, because you won’t like the answer. But if
* o: W2 e+ L/ X$ yyou want some tips on being a vulture, for when the moment’s right, then clip this
4 i% }; E( n% B' s X* Pand stick it on the fridge. (By the way, this is another preview of my coming book.)& T5 `) \ z) y' ^7 J ^( v
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* Offer what you want to pay, not what the vendor is asking to be paid. With so many
; \) |) m, u( u- Lproperties listed, and so little sales activity, every offer has to be taken
# Z) I) m4 z) Pseriously. Only by writing up an offer on your own terms, at your own price, will you * g; C) U& C4 K" p2 z8 |' w8 I
get a sign-back showing the true level of desperation you’re dealing with.- O$ m& l/ d3 x- c
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* Always submit the offer with a deposit cheque, which is like putting a shiny lure on
: y" t0 x' Q0 Nthe end of your fishing line. However, the offer must stipulate the cheque is not % O8 b+ H, e7 c7 ?, q8 u4 _
cashable until a firm and binding agreement is reached. So, it means nothing, while " _" ?4 y: w0 f M
having a powerful psychological impact.' S1 B0 m1 U5 \4 u: L) h' O
) ~$ j; e! K" E* Throw in as many conditions as you want. This will create an offer that is 2 {: x3 N W+ [! E# t8 I6 C
completely tailored to your needs and wants while providing elements you can remove in 1 B3 y' R3 E- [$ N
order to gain things you truly want. So, for example, make the offer conditional on 9 e$ M) G( x l! b
the vendors paying all your closing costs, including land transfer tax. While you
3 t9 j; O4 v0 `4 l& tnever expect that to happen, you can remove it during negotiations in order to get 0 c% s2 l. U* r: F2 ]
what you do want and expect, which is a bargain price.0 c- Y" p' x% ?9 d1 k5 q
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* Ditto for conditions giving you time to arrange financing or even to sell another
3 H; N6 X. q* V3 u) b$ Xproperty – they are both traditional deal-breakers, and the vendor’s agent will know 8 l- M6 p/ X, F& E9 e
that immediately. So, by reluctantly removing them you move far closer to getting that
+ w# ?/ Q) P7 W' Qprice.' ^* t& Z7 b. g z. v& |
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* Best, however, to insist on a home inspection. This condition should give you five
% o( O% s/ {; a% C; N+ }business days to complete the process, and is normally done at the purchaser’s ; H0 G8 K/ V* y3 A) b
expense. The reason you want this is because almost all properties need some kind of
, ]- _1 `3 P7 ^3 kwork done in order to make them perfect, and when you get the inspector’s report you
4 Y5 v3 S: e: t6 @0 |* K" ihave leverage to help you drive down the price. Simply get an estimate of the cost of
: k; H/ |0 s1 b8 v8 uthe repairs and ask for the deal to be rewritten with a price reduced by that amount. ; T9 I4 R) |2 W8 s& |; q
Since the vendor knows the condition is entirely for your benefit and the deal will 9 `5 V( C% z( o) I4 V
die unless you sign a waiver, well, guess what? Vulture.* v/ O6 O1 ~/ f4 B4 S* Y8 n2 U
7 I2 Q) U5 T- \* U* And remember that the closing date is also an important poker chip to play. Have
9 A7 v, k1 v# A L. s8 W) ~' Gyour agent find out what the vendor wants, and then use that to help leverage the
; \* O* e) \# J# @price down. Additionally, you can throw any assets you see around the property into 4 O0 q; S# }" V/ O
your offer – power tools, appliances, lawn tractor, Harley-Davidson, whatever. The
0 R0 T7 c& g# j2 U2 s* B9 emore you put in, the more clutter there is for the vendor to wade through, and the
$ g: J9 V9 {1 H Z1 T; U( ^- Ubetter chance you have of securing the best deal.( I0 i/ B% L# K& S% R9 u
+ N! T) G3 }6 c, A y( A! X* Speaking of which, why not make two offers at the same time on two competing v' n) |8 J! e$ ?% D8 _
properties, and then let that fact be known (through your agent) to the vendor? That
9 v) ]1 M1 P6 a, w1 _; i1 L$ twill add even more pressure to the poor guy, as he tries to figure out what he must do
1 e2 C/ V3 F J7 [' n. F G, ito save the deal, and give you what you want. This may be cruel and unusual, but just
3 t! r- `/ k* _3 U, zconsider it payback for all those multiple-offer situations greedy vendors placed g# l5 p4 f) X! T t
buyers in during the bubble years.
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1 `4 U/ s8 v9 ^1 O! a! Y* And, of course, you can make a low-ball offer, get a sign-back, and then just let it
/ ?6 }- P- e8 Y& K) N% Ydie. Wait a week and go back in with another one, for the same low price. Odds are you 1 }* l1 i9 v z) X3 L+ U F( [
will not get the same response this time. The stressed-out vendor may hate you, but
& d# F7 J/ v Z) h5 k1 `$ I& y& ehe’ll close. |
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