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I’m often asked by people who like to prey on others how to buy real estate in a 4 U" q" l) C5 V2 e/ g9 \
falling market, like this one. The danger of doing so is that you buy before the
/ e3 I4 u7 J4 i l/ bbottom arrives, and take a capital gains hit. The advantage is you hold absolutely all ) r6 u/ w$ g) h
the cards, and can strike a great deal while the victim-seller is writhing in pain and 8 q4 h( `- `' w1 k% q! @5 c
begging 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
) T% k' q- G4 f3 ]you want some tips on being a vulture, for when the moment’s right, then clip this % C2 o& s* P. Z2 }8 l3 a4 Q
and stick it on the fridge. (By the way, this is another preview of my coming book.)! M2 i6 X, X7 A! I, l+ Y; J
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* Offer what you want to pay, not what the vendor is asking to be paid. With so many
9 A( ~+ N5 W3 D* oproperties listed, and so little sales activity, every offer has to be taken
/ r' g- T: \( iseriously. Only by writing up an offer on your own terms, at your own price, will you # l. @8 W* o0 ]2 K, Z. p2 K
get 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
1 S+ t j: l0 c8 ^/ h$ G7 Zthe end of your fishing line. However, the offer must stipulate the cheque is not
/ f' {) A: p. ]$ Ocashable until a firm and binding agreement is reached. So, it means nothing, while ! M4 E, r& p! b6 e1 e7 t7 t
having a powerful psychological impact.
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; u& Y+ Q; t% `- _5 ~5 s* Throw in as many conditions as you want. This will create an offer that is
4 b! v ^: {8 O, I5 c. {completely tailored to your needs and wants while providing elements you can remove in
: u0 Q4 [3 t! R7 {9 Border to gain things you truly want. So, for example, make the offer conditional on - h0 }' w! E# H" ~$ J5 V
the vendors paying all your closing costs, including land transfer tax. While you 4 e4 T, Z/ V8 u; X9 u7 Y% @
never expect that to happen, you can remove it during negotiations in order to get
/ Y. I$ R; L( {+ rwhat you do want and expect, which is a bargain price.9 O% I# ` H7 k' d- z
& D) k$ G. C( Z4 _1 ~* Ditto for conditions giving you time to arrange financing or even to sell another
: N9 K: Q' R' t4 q. A" @% Gproperty – they are both traditional deal-breakers, and the vendor’s agent will know
4 ?6 k; |( L/ j3 o; t& h/ Nthat immediately. So, by reluctantly removing them you move far closer to getting that
! t4 _ q' d6 |4 qprice.
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8 X3 D p3 z) }( v3 m3 b( ^& F* Best, however, to insist on a home inspection. This condition should give you five * G& O! C3 i: n$ @: ]' Y
business days to complete the process, and is normally done at the purchaser’s . U( Y }5 D* B
expense. The reason you want this is because almost all properties need some kind of + {# m; j# o/ }- D3 [& h2 _
work done in order to make them perfect, and when you get the inspector’s report you + Q y7 k D9 V4 t' T5 Y4 C
have leverage to help you drive down the price. Simply get an estimate of the cost of
O$ | X9 v/ r5 _) Z7 `/ O1 q0 k* Wthe repairs and ask for the deal to be rewritten with a price reduced by that amount.
) z( I l" o& E; }Since the vendor knows the condition is entirely for your benefit and the deal will ; U2 W0 F9 d0 m$ E1 x. H1 U
die unless you sign a waiver, well, guess what? Vulture.3 i. }0 T* Q9 g1 g/ w: I
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* And remember that the closing date is also an important poker chip to play. Have 4 \6 K( y* K, J, D1 Z
your agent find out what the vendor wants, and then use that to help leverage the % }: f3 l i2 y% L* p
price down. Additionally, you can throw any assets you see around the property into
! Q' f, ?% |4 ^9 o/ Vyour offer – power tools, appliances, lawn tractor, Harley-Davidson, whatever. The % n( f7 k$ B3 `: K& y0 _" R) n
more you put in, the more clutter there is for the vendor to wade through, and the
f9 r3 n0 D1 N N3 Z4 C+ H8 a8 ebetter chance you have of securing the best deal.! w0 b1 \& f5 L( G
+ E. w) i9 p0 M- `4 W0 T, A. T* Speaking of which, why not make two offers at the same time on two competing
; z- J ~; n: Z' I( a+ \- B" Nproperties, and then let that fact be known (through your agent) to the vendor? That 2 n6 k& l6 j) c4 p) k
will add even more pressure to the poor guy, as he tries to figure out what he must do 6 @0 Q- o) `0 b1 O( C# c2 K4 n% g
to save the deal, and give you what you want. This may be cruel and unusual, but just
4 u' G- N5 A- ~5 P3 Zconsider it payback for all those multiple-offer situations greedy vendors placed
" h& I U4 M4 }9 u$ D rbuyers in during the bubble years.. I* T* t& p9 U
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* And, of course, you can make a low-ball offer, get a sign-back, and then just let it
; z! x7 s/ u2 P! bdie. Wait a week and go back in with another one, for the same low price. Odds are you 8 ]1 N; f# p+ E7 {' [+ |
will not get the same response this time. The stressed-out vendor may hate you, but
7 x$ O5 d* o- s: O7 e6 s1 G/ Uhe’ll close. |
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