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I’m often asked by people who like to prey on others how to buy real estate in a
1 K# C* A+ u) t5 Qfalling market, like this one. The danger of doing so is that you buy before the
" `1 K+ n0 l3 ]7 \/ j6 b# q& Vbottom arrives, and take a capital gains hit. The advantage is you hold absolutely all 8 D0 F5 K$ ?) c
the cards, and can strike a great deal while the victim-seller is writhing in pain and
0 ?% j' ]7 ?( A) Zbegging for mercy. That’s the fun part.
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5 F# z( f2 L" v8 ?* n& U, t- }+ A- ySo, don’t ask me if it’s time to buy yet, because you won’t like the answer. But if
# B* W3 V# S# k/ wyou want some tips on being a vulture, for when the moment’s right, then clip this
7 I! @& [" M+ V* V' F5 ?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 ) X8 {" z/ x- v' A5 F* n' A7 U# ]) S
properties listed, and so little sales activity, every offer has to be taken
0 F6 j U/ ?+ ~2 Wseriously. Only by writing up an offer on your own terms, at your own price, will you & \3 O, `8 j6 V* C7 Q4 b8 h4 _4 e
get a sign-back showing the true level of desperation you’re dealing with.
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1 n; m7 O7 w1 Y7 B* \" O* Always submit the offer with a deposit cheque, which is like putting a shiny lure on
3 A3 \) H- I ^9 l4 ithe end of your fishing line. However, the offer must stipulate the cheque is not
2 a+ _3 C% V0 w. B2 a" n H {9 n$ f$ xcashable until a firm and binding agreement is reached. So, it means nothing, while ' p- U9 m( a7 m: L$ L% ^, ?5 ^
having a powerful psychological impact.
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H6 `( _! O' j; N6 X/ Y* Throw in as many conditions as you want. This will create an offer that is # P. s; ` m, y0 y3 l5 f9 ?" B
completely tailored to your needs and wants while providing elements you can remove in
. `+ Z5 S8 K' `* p- p+ F: Yorder to gain things you truly want. So, for example, make the offer conditional on
, n: }9 g- R @# athe vendors paying all your closing costs, including land transfer tax. While you
- U+ J& h/ ], L& B( Inever expect that to happen, you can remove it during negotiations in order to get 8 |" s7 J4 H: v) T0 w; V
what you do want and expect, which is a bargain price.+ J, Y# G0 M+ r! A) K" j, {
1 m7 x0 d. t/ h5 N5 n! ]8 Z2 n* Ditto for conditions giving you time to arrange financing or even to sell another : G8 C* P8 b5 S6 V
property – they are both traditional deal-breakers, and the vendor’s agent will know ( K6 E2 w8 i9 ?2 w
that immediately. So, by reluctantly removing them you move far closer to getting that y/ L- o5 {" \9 d9 c
price.
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- s- i: u, G4 @& S* r- |. a" E* Best, however, to insist on a home inspection. This condition should give you five $ _, e; m0 M# C
business days to complete the process, and is normally done at the purchaser’s ( j/ a9 M Z" |( Z; n, [
expense. The reason you want this is because almost all properties need some kind of 0 f7 O, A! X- N: r l1 a
work done in order to make them perfect, and when you get the inspector’s report you
) p7 k) k7 Y* j4 I9 h1 Y5 Ehave leverage to help you drive down the price. Simply get an estimate of the cost of . U3 H# P6 e# S
the repairs and ask for the deal to be rewritten with a price reduced by that amount. 2 S6 j& ~- b+ C4 D M: l n! [
Since the vendor knows the condition is entirely for your benefit and the deal will
+ S$ Q2 E5 F3 k7 s( R, ?9 N" R `. i ~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
/ {% \! E/ ]+ |8 \/ I9 {6 U9 n Qyour agent find out what the vendor wants, and then use that to help leverage the
/ E2 c8 T& I" g/ C, Iprice down. Additionally, you can throw any assets you see around the property into 0 ~- t, |3 ~% |& p7 v! m6 r
your offer – power tools, appliances, lawn tractor, Harley-Davidson, whatever. The
k( F* o% U2 r3 W; hmore you put in, the more clutter there is for the vendor to wade through, and the
) ^2 p S/ M! L9 Zbetter 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
/ L5 K6 [4 J- B1 G# X# W3 D4 \properties, and then let that fact be known (through your agent) to the vendor? That 8 M0 c0 u' I, e. X
will add even more pressure to the poor guy, as he tries to figure out what he must do o7 L9 t9 b v
to save the deal, and give you what you want. This may be cruel and unusual, but just
: A% e5 @1 y8 N) {consider it payback for all those multiple-offer situations greedy vendors placed 7 Z% u# B! f: ~$ ?4 Q/ P( j; F1 C
buyers in during the bubble years.
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. T: k* V5 R2 Y' b+ K8 C9 i* And, of course, you can make a low-ball offer, get a sign-back, and then just let it % v4 `4 W4 k% b
die. Wait a week and go back in with another one, for the same low price. Odds are you 1 `5 p, {* Z1 Q& y; \: N
will not get the same response this time. The stressed-out vendor may hate you, but 6 I& \& T* F! f6 u5 s f% e
he’ll close. |
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