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I’m often asked by people who like to prey on others how to buy real estate in a
3 ~$ ~- J& M9 ]: b0 B/ Pfalling market, like this one. The danger of doing so is that you buy before the
- V4 o) c7 z- r1 X0 ^' L7 v7 Z) {* Qbottom arrives, and take a capital gains hit. The advantage is you hold absolutely all
: U$ D c. q- }$ `6 J9 X: ]2 T& nthe cards, and can strike a great deal while the victim-seller is writhing in pain and
$ h6 b" v% v/ h( T1 tbegging for mercy. That’s the fun part.
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0 x8 @' U/ n& BSo, don’t ask me if it’s time to buy yet, because you won’t like the answer. But if
" X% b& Q) T5 t+ `% l9 g* jyou want some tips on being a vulture, for when the moment’s right, then clip this 3 L4 x0 G1 X9 x7 \
and 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 0 ]/ o2 |/ \8 O5 Z( I
properties listed, and so little sales activity, every offer has to be taken - Q. {. U$ A, i' ?$ D V
seriously. Only by writing up an offer on your own terms, at your own price, will you
& v4 i7 G! b. U) d; q& t2 z3 h$ Q8 T2 `get a sign-back showing the true level of desperation you’re dealing with.1 J( o' ?' [/ D& y! P3 W0 X# ^5 S
, G( M0 [4 e, b! f* Always submit the offer with a deposit cheque, which is like putting a shiny lure on * c& M$ f% _" `7 d# o
the end of your fishing line. However, the offer must stipulate the cheque is not
' x$ Q" X: k' B. p8 r" W) V0 Y/ fcashable until a firm and binding agreement is reached. So, it means nothing, while
0 i1 Z% q/ W. T+ Q: fhaving a powerful psychological impact.
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+ v' j* G2 {+ E' m' h* Throw in as many conditions as you want. This will create an offer that is
- A+ r; `) p- x6 R$ ^0 Tcompletely tailored to your needs and wants while providing elements you can remove in
* _) b( B, g) M, Zorder to gain things you truly want. So, for example, make the offer conditional on
% ?$ J+ b* K F$ E- T! hthe vendors paying all your closing costs, including land transfer tax. While you
/ s4 y4 \% a2 i& K6 H. U U: tnever expect that to happen, you can remove it during negotiations in order to get
' a g3 L) h/ T( I+ f2 J( ~8 gwhat you do want and expect, which is a bargain price.
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% m4 A: \" k' R3 o, v% f }* Ditto for conditions giving you time to arrange financing or even to sell another
7 ^1 F+ D. m+ J& lproperty – they are both traditional deal-breakers, and the vendor’s agent will know , `" o- J8 I+ f; m: t
that immediately. So, by reluctantly removing them you move far closer to getting that ) U5 P; f) s ?( l" i- N0 \% o% F
price.
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* Best, however, to insist on a home inspection. This condition should give you five
0 j# }, d9 \# @8 Dbusiness days to complete the process, and is normally done at the purchaser’s * \" l. E- G. N8 N
expense. The reason you want this is because almost all properties need some kind of 0 ?' r9 P( T8 T- s2 z+ b5 C
work done in order to make them perfect, and when you get the inspector’s report you
8 M( ?/ Z7 U9 P4 x9 \' fhave leverage to help you drive down the price. Simply get an estimate of the cost of
n" }6 g1 T4 wthe repairs and ask for the deal to be rewritten with a price reduced by that amount. 7 m' B/ G- S% g* T( X9 a2 F$ [
Since the vendor knows the condition is entirely for your benefit and the deal will
& {! t8 J3 }/ r& o: `! gdie unless you sign a waiver, well, guess what? Vulture.
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* And remember that the closing date is also an important poker chip to play. Have * b+ q% ^$ U7 i5 `0 |! p) ~
your agent find out what the vendor wants, and then use that to help leverage the
6 p7 x4 n. K5 k0 q& E5 O' ]: bprice down. Additionally, you can throw any assets you see around the property into 8 K: q& p, \7 [5 B G! ~
your offer – power tools, appliances, lawn tractor, Harley-Davidson, whatever. The 4 H2 c5 `7 I- r' `
more you put in, the more clutter there is for the vendor to wade through, and the % |* {; p0 y+ j, b* o; a
better chance you have of securing the best deal.; n& E4 u% R0 X! Q
7 b% n8 O6 L8 P8 V* Speaking of which, why not make two offers at the same time on two competing
$ ~& O2 S f+ H0 iproperties, and then let that fact be known (through your agent) to the vendor? That 9 B$ ]8 d2 S# T) z9 Z0 e
will add even more pressure to the poor guy, as he tries to figure out what he must do 1 X3 x$ S# l- f2 }3 @& Z) R% W
to save the deal, and give you what you want. This may be cruel and unusual, but just
+ u+ J+ |. ?1 c X4 Cconsider it payback for all those multiple-offer situations greedy vendors placed / e" G0 X# n3 g
buyers in during the bubble years.1 N: j2 c( V8 O* j) K# D( B' X$ C
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* And, of course, you can make a low-ball offer, get a sign-back, and then just let it
0 g; Q6 ?) E& U- q2 I! x- wdie. Wait a week and go back in with another one, for the same low price. Odds are you . }$ b% `( l$ u5 c9 Y
will not get the same response this time. The stressed-out vendor may hate you, but
5 Y! h1 i& g' x' phe’ll close. |
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