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I’m often asked by people who like to prey on others how to buy real estate in a & f9 J7 `" \8 F
falling market, like this one. The danger of doing so is that you buy before the
9 f$ y9 D4 D7 ~4 r! F. qbottom arrives, and take a capital gains hit. The advantage is you hold absolutely all % K( H2 x5 `. E4 t+ ~
the cards, and can strike a great deal while the victim-seller is writhing in pain and / a+ x; Q6 H' g- B: G% a- m
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 . w r2 x& [3 f/ h
you want some tips on being a vulture, for when the moment’s right, then clip this
( ]/ `% n$ S8 M) `0 n# g+ gand stick it on the fridge. (By the way, this is another preview of my coming book.)3 R3 i3 W' P0 r1 u
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* Offer what you want to pay, not what the vendor is asking to be paid. With so many
w$ k6 l+ q* D0 {properties listed, and so little sales activity, every offer has to be taken
. S6 f0 c7 I& h' N# z: Y7 i3 bseriously. Only by writing up an offer on your own terms, at your own price, will you r2 k/ c- ?) ^$ R
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 5 ` P: x1 D9 e+ J T( L
the end of your fishing line. However, the offer must stipulate the cheque is not ( n1 V$ e1 L: Y- X
cashable until a firm and binding agreement is reached. So, it means nothing, while 0 T* |1 R' r; ]4 @
having a powerful psychological impact.0 @. C+ H) N" S) `8 J& T
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* Throw in as many conditions as you want. This will create an offer that is
2 M3 @8 @! ~ k& X5 F S' Icompletely tailored to your needs and wants while providing elements you can remove in
7 i' d) ]1 F# D( u7 ^- G# v$ G: Oorder to gain things you truly want. So, for example, make the offer conditional on
6 K4 U5 X& l5 O: ] Zthe vendors paying all your closing costs, including land transfer tax. While you
+ }6 o+ u6 n( L' K7 C% Q& g) ?never expect that to happen, you can remove it during negotiations in order to get $ a- n; t* d1 [/ z
what you do want and expect, which is a bargain price.* z, L- v `3 g k6 B
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* Ditto for conditions giving you time to arrange financing or even to sell another 0 V5 t( S9 C: i6 e
property – they are both traditional deal-breakers, and the vendor’s agent will know 9 l% s) @6 Q+ ~: s8 p
that immediately. So, by reluctantly removing them you move far closer to getting that 4 E1 [: B; B$ q
price.' U8 d) J: V- d0 W
1 u |8 [/ V# z! N* Best, however, to insist on a home inspection. This condition should give you five % S3 w L+ q% J; u r4 [8 E6 a
business days to complete the process, and is normally done at the purchaser’s 3 Y E: ?% O4 C: u4 Z& d
expense. The reason you want this is because almost all properties need some kind of
2 v. j7 j, q4 l! Q' i* Uwork done in order to make them perfect, and when you get the inspector’s report you $ ~0 e8 p2 p# l' j2 Y9 s5 }
have leverage to help you drive down the price. Simply get an estimate of the cost of % L! e& [7 T) M0 k8 u
the repairs and ask for the deal to be rewritten with a price reduced by that amount.
6 V- y1 b% S6 z. d* G* H4 wSince the vendor knows the condition is entirely for your benefit and the deal will
+ {* @- z) |3 e2 r+ g9 ]6 \die 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
4 @7 _% O5 Q. \- Q) P4 vyour agent find out what the vendor wants, and then use that to help leverage the
3 ^% O: Q" S% h# H3 Q: Jprice down. Additionally, you can throw any assets you see around the property into 7 B) t# H3 }2 L) U" X7 U
your offer – power tools, appliances, lawn tractor, Harley-Davidson, whatever. The $ P- n9 y" }, X: y
more you put in, the more clutter there is for the vendor to wade through, and the / ~: o4 o" P7 t
better chance you have of securing the best deal.
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* Speaking of which, why not make two offers at the same time on two competing : E; S* d& y( ~, ^1 n6 V. g* r5 z8 G
properties, and then let that fact be known (through your agent) to the vendor? That
0 o+ p4 g- x3 M- M' g/ uwill add even more pressure to the poor guy, as he tries to figure out what he must do 0 t+ ^# E9 V5 V7 [
to save the deal, and give you what you want. This may be cruel and unusual, but just
7 M9 U* r9 a9 Vconsider it payback for all those multiple-offer situations greedy vendors placed
5 _) ?7 z8 Z4 `2 k& E+ _' Dbuyers 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
. g$ G" H- O' tdie. Wait a week and go back in with another one, for the same low price. Odds are you ! o7 r2 i& g' O" E
will not get the same response this time. The stressed-out vendor may hate you, but
: z+ h& H. A5 u L6 P- r! dhe’ll close. |
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