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I’m often asked by people who like to prey on others how to buy real estate in a ; \# u* f0 v' a# U3 H9 z
falling market, like this one. The danger of doing so is that you buy before the
! F% G, }$ e9 E; pbottom arrives, and take a capital gains hit. The advantage is you hold absolutely all
% ]. n0 L) @/ i' |1 Wthe cards, and can strike a great deal while the victim-seller is writhing in pain and
6 ?% ]* M2 J' H4 N- O' z$ @7 T% r: y, q, Dbegging for mercy. That’s the fun part.
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So, don’t ask me if it’s time to buy yet, because you won’t like the answer. But if , B, Z: {6 U$ C) B
you want some tips on being a vulture, for when the moment’s right, then clip this
5 w4 K0 i; e. N% q6 J) eand stick it on the fridge. (By the way, this is another preview of my coming book.)
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, N% r; B3 E7 M8 Z7 |8 z* Offer what you want to pay, not what the vendor is asking to be paid. With so many
$ A( i$ T8 p( a: fproperties listed, and so little sales activity, every offer has to be taken
+ `7 W- I: T7 |) s: x) [+ nseriously. Only by writing up an offer on your own terms, at your own price, will you
1 f8 ?5 b6 t: I- {$ ^ _get a sign-back showing the true level of desperation you’re dealing with.* x# y1 w i( J3 }& w
$ d/ }2 L3 N- H9 M6 Z* Always submit the offer with a deposit cheque, which is like putting a shiny lure on 4 E) U* V* M6 \9 N5 m7 V
the end of your fishing line. However, the offer must stipulate the cheque is not 9 K0 P+ a& C7 V1 E
cashable until a firm and binding agreement is reached. So, it means nothing, while . b2 U( j3 V5 R: }
having a powerful psychological impact.
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* P0 B( x( I3 o# H$ V3 g* Throw in as many conditions as you want. This will create an offer that is 3 X9 X" g0 A- z
completely tailored to your needs and wants while providing elements you can remove in
: s& _6 d. N" e$ jorder to gain things you truly want. So, for example, make the offer conditional on 7 |5 N2 M0 t, o; q$ e# w: h
the vendors paying all your closing costs, including land transfer tax. While you
; O( g4 w8 [' ]; c) t+ M, V7 ~2 Inever expect that to happen, you can remove it during negotiations in order to get
: R9 {1 e" X9 q2 ~) @what you do want and expect, which is a bargain price.
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& {( o( g2 B* H6 b: C* Ditto for conditions giving you time to arrange financing or even to sell another
$ o) ^/ m! }2 T0 t3 m" v' }" Cproperty – they are both traditional deal-breakers, and the vendor’s agent will know
0 b. @; i8 E) R! K: B- dthat immediately. So, by reluctantly removing them you move far closer to getting that
( S) |5 \7 \; J7 t. `% @price.
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2 H V. f$ a+ W- o$ A* Best, however, to insist on a home inspection. This condition should give you five / q6 Z! O* w- a+ E
business days to complete the process, and is normally done at the purchaser’s
8 ]% B- W1 ^0 Rexpense. The reason you want this is because almost all properties need some kind of
7 E; M( P' S" n5 r' Uwork done in order to make them perfect, and when you get the inspector’s report you ; g) q+ b: c# c& |( m/ ~6 L
have leverage to help you drive down the price. Simply get an estimate of the cost of
8 y/ W( D$ u/ t# ~the repairs and ask for the deal to be rewritten with a price reduced by that amount.
3 K K2 A6 V6 A& Y( |Since the vendor knows the condition is entirely for your benefit and the deal will
4 ^2 ~) I j# k/ Wdie unless you sign a waiver, well, guess what? Vulture.
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6 y" E7 Z$ n) P* And remember that the closing date is also an important poker chip to play. Have
1 f1 Y# P1 s( i+ _" ^your agent find out what the vendor wants, and then use that to help leverage the 6 P n% @, o3 J2 K: Z' d- `: n1 z% q: Y
price down. Additionally, you can throw any assets you see around the property into 6 D% W+ |8 f) C* u m( k
your offer – power tools, appliances, lawn tractor, Harley-Davidson, whatever. The 5 \% T1 T8 G4 ^# Q
more you put in, the more clutter there is for the vendor to wade through, and the
. t0 }" W/ z/ h4 e, vbetter chance you have of securing the best deal.& N$ N1 B* ^6 B# o0 T: H7 f
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* Speaking of which, why not make two offers at the same time on two competing 5 v5 f$ d; F5 A7 U9 r- v! j5 V
properties, and then let that fact be known (through your agent) to the vendor? That 0 }) c7 ~3 H. N1 Y1 F: ^5 t
will add even more pressure to the poor guy, as he tries to figure out what he must do + |9 {" n4 j# M: ]( C
to save the deal, and give you what you want. This may be cruel and unusual, but just 5 A! y; ]. l9 `$ }: M3 `: U( p
consider it payback for all those multiple-offer situations greedy vendors placed
" {/ ?4 T: a. p( I2 abuyers 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 & d1 \) X) ?1 w+ ]- Z
die. Wait a week and go back in with another one, for the same low price. Odds are you & t* a. P9 N7 A8 X8 V [: K
will not get the same response this time. The stressed-out vendor may hate you, but
7 I# k/ J; P1 ^7 _5 j9 xhe’ll close. |
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