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I’m often asked by people who like to prey on others how to buy real estate in a
0 t e8 g/ A) R* C2 k- Ifalling market, like this one. The danger of doing so is that you buy before the
) r% R3 i8 `8 L: O3 _- obottom arrives, and take a capital gains hit. The advantage is you hold absolutely all
9 A1 ]$ i6 y3 U( h( \9 t1 y) }& _6 Vthe cards, and can strike a great deal while the victim-seller is writhing in pain and
3 J v* Q8 R( R2 B& f" Pbegging for mercy. That’s the fun part.+ P+ O1 F0 w+ d; w
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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
8 j5 M! j( d3 I: O, ] I% T% h5 Nyou want some tips on being a vulture, for when the moment’s right, then clip this
% A4 c# o' |! M* Fand stick it on the fridge. (By the way, this is another preview of my coming book.)
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, K* j) l. ~: ]1 d4 m1 S6 \* Offer what you want to pay, not what the vendor is asking to be paid. With so many & }3 V, |' i8 M$ \. U
properties listed, and so little sales activity, every offer has to be taken & X( ]2 H7 L8 _: P+ a
seriously. Only by writing up an offer on your own terms, at your own price, will you
5 n" u1 [% @) Eget a sign-back showing the true level of desperation you’re dealing with.+ H2 M6 v2 [& s F& s/ V
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* Always submit the offer with a deposit cheque, which is like putting a shiny lure on
; W3 K4 }' e0 F' e/ U% jthe end of your fishing line. However, the offer must stipulate the cheque is not
+ A! c2 l$ h2 C5 M- j3 lcashable until a firm and binding agreement is reached. So, it means nothing, while 2 S1 o6 Y' t0 u0 {- p
having a powerful psychological impact.
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) Y/ B6 K) f( W3 Y* Throw in as many conditions as you want. This will create an offer that is
X9 p4 k/ n9 dcompletely tailored to your needs and wants while providing elements you can remove in 2 K i0 y) x" c3 Z/ {
order to gain things you truly want. So, for example, make the offer conditional on 1 s5 [! Q7 b2 j y6 u5 V9 H1 q
the vendors paying all your closing costs, including land transfer tax. While you
; y# s$ T8 P$ \2 {( l/ H; A b- Onever expect that to happen, you can remove it during negotiations in order to get
' o: F8 u5 W( d/ _' Ywhat you do want and expect, which is a bargain price.0 L! X- F6 ^" Q/ ?
9 u( u3 |9 g1 k3 A* Ditto for conditions giving you time to arrange financing or even to sell another
+ D6 J r) o. _+ x6 nproperty – they are both traditional deal-breakers, and the vendor’s agent will know . Y0 N$ |6 `, a
that immediately. So, by reluctantly removing them you move far closer to getting that , K8 g% F) L I7 [7 S* P% t; x. E1 E
price.
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* Best, however, to insist on a home inspection. This condition should give you five $ R( Y* Q4 x& d& @
business days to complete the process, and is normally done at the purchaser’s ; d- P! u* {; \0 Q3 N! f
expense. The reason you want this is because almost all properties need some kind of
6 U$ `! M' c+ H( @8 k7 kwork done in order to make them perfect, and when you get the inspector’s report you
$ u/ O# M6 q/ l& L) e5 uhave leverage to help you drive down the price. Simply get an estimate of the cost of * B6 j3 S) X# o
the repairs and ask for the deal to be rewritten with a price reduced by that amount.
% z' s6 P$ c( ]6 wSince the vendor knows the condition is entirely for your benefit and the deal will
; n5 n9 ?6 P# ^/ l* V" G* \die unless you sign a waiver, well, guess what? Vulture.1 [; O3 d8 t' o; Y0 W$ ^. i
& A ]% u: @) a- U* And remember that the closing date is also an important poker chip to play. Have
( b$ C- N( I# w0 z" a b/ oyour agent find out what the vendor wants, and then use that to help leverage the
3 a6 V1 W$ p2 ^+ Gprice down. Additionally, you can throw any assets you see around the property into
6 s8 W! C5 t6 u. A* Gyour offer – power tools, appliances, lawn tractor, Harley-Davidson, whatever. The ) U! C+ S4 g& ?2 `! g6 @& P* C
more you put in, the more clutter there is for the vendor to wade through, and the
7 W% @5 p: a/ C$ h6 k: ubetter chance you have of securing the best deal.9 H9 m$ l. r9 Q# ]* n; N9 k
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* Speaking of which, why not make two offers at the same time on two competing ; Z) S3 D! j: E( y/ F
properties, and then let that fact be known (through your agent) to the vendor? That 4 ?- g5 Z. n/ a( K, P3 f
will add even more pressure to the poor guy, as he tries to figure out what he must do
4 T: r( x' h6 v( g1 dto save the deal, and give you what you want. This may be cruel and unusual, but just / @" R" e& n! L; Z G" S+ {
consider it payback for all those multiple-offer situations greedy vendors placed
, U8 ?" o$ w; b) K8 C5 P) Vbuyers in during the bubble years.$ h! @$ m: V( o) v w/ G8 r
& E' b# ?7 X( ^! _6 I- b3 u7 W! e" k* And, of course, you can make a low-ball offer, get a sign-back, and then just let it
?( X5 X2 D( X2 o" X! @2 Adie. Wait a week and go back in with another one, for the same low price. Odds are you 0 I e& y3 ^1 ]8 O! `
will not get the same response this time. The stressed-out vendor may hate you, but
: c' ]" Y* A: t- S) ]! lhe’ll close. |
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