So far this year I’ve purchased two properties, sold two, listed one and am working on a new deal. This useless information is offered as proof I have no hate-on for real estate. In fact, like you, I’m smitten. I know what lust is when I stand in front of a portico. My loins dance as I run my fingers across a mortar joint binding together the sensuous imperfections of century-old bricks. I’m a building junkie. A hot listing quickens the pulse. Closing day’s climactic.
In past months I’ve mentioned a few of my real estate trysts, only to have critics howl over my hypocrisy. How can you buy, they cry, when you forecast more troubled times to come for housing? If real estate faces a major correction, why not wait? And aren’t you the guy who’s always telling people to stop being juiced for glass countertops, and rent?
Easy answer. Buy what you can afford. Buy where there’s value. Buy smart. Then you can get as horny as you want.
There are many techniques for making this happen. Here, in no special order, are ten of then.
Seek old, tired listings.
Find out what the DOM is for every property you research. The greater the number of days on the market, the better. The vendor will be motivated and his agent hungry to facilitate a deal. If you run around chasing new listings, you’ll pay too much. Guaranteed. Leave that silliness for the virgins.
Look for price reductions.
That’s not exactly the duh statement it appears to be. One the biggest mistakes greedy sellers make is asking too much for their property, often egged on by a dumbass agent who wanted the listing. But a too-high price means no quick sale, leading to a price cut. If not timed right, this can result in a stale listing, necessitating more cuts. After a few months and numerous slashes, the property has the odour of death on it. Perfect for vultching.
Take your time.
Now, go slow. Meticulously research the property, its sales history, comparables and the people who own it. Let it be known you’re interested, may come up with an offer, but on your own terms and in your own time. Now you’re in control and the vendor knows it. This is a necessary precursor to domination.
Explain your offer, clearly.
When the time comes, and once you have built a relationship with the seller or the listing agent (preferably both), try talking through the offer before you present it. Explain clearly why the property is worth only what you are considering offering. Let them howl and flummox a bit, but without a formal offer in front of them. They’ll get over the emotion, and when your paper does arrive a day or two later, the results could amaze.
Don’t be afraid to walk.
Ever. If the seller signs back your low-ball (but clearly explained) offer, there’s no need to counter-sign. Just let the thing expire. The vendor will be surprised, if not shocked, and immediately feel remorse at having lost the deal. Give it a week. Do it again.
Make it easy to say yes.
The offer should be exceptionally clean. Other than beating him down on price, give the seller every reason possible to agree to the haircut. Find out what’s important to him – the most convenient closing date, for example, or the ability to stay on for a few months after the deal’s done. Be considerate and kind on all aspects other than the dollars. And no conditions. No financing or home inspection (get it done in advance at your own expense). Offer to help them move.
After sitting on the market for months, most sellers just want to get the hell out. Offer to close as soon as possible – like two weeks (ensure you have an experienced real estate lawyer lined up). And dangle a substantial deposit in their faces – at least 10% of the purchase price, instead of the usual 5%. This often has a monumental emotional impact.
Always indicate to the seller, and early on in the process, that your offer will be a ‘cash deal’. In reality, all transactions are cash unless the owner’s agreed to a VTB (vendor take-back mortgage). But this imparts the message that you are a buyer of substance with no need to prearrange a mortgage, sell another house, or stiff your parents. Remember, sellers want clean, simple, fast and decisive.
Have your own agent.
The listing agent works for the seller. Even if you enter into a relationship with that person (dual agency) you are now working with someone whose first loyalty was elsewhere. Personally I’d never buy a home without my own representation – an experienced person who will help argue for my point of view and provide the necessary buffer and foil. BTW, this person will end up being paid by the seller. What’s not to love?
Seek a down market.
As I have pointed out too many times, the housing correction’s in full swing in many parts of the country and spreading like a virus in others. If you’re waiting for a 25% reduction in North Toronto or West Van, settle in for a long one. But if you covet the Okanagan or Annapolis Valleys, for example, the moment of capitulation may have arrived. There are listings so old they now need surgery, and sellers who’ll get excited just to see you.
So. Take your time. Be thorough and gentle. Persuade. Make it easy to say yes. Be firm at the right moment. Close with conviction.
As in love, how hard is that?