I will put it in a rhetorical form so
that you can ask yourself the questions when the time arrives. If you have not
thought of some of these ideas then I am glad that I have been able to help.
Taken as a whole these ideas should not
be misconstrued as being any form of gospel.
Rather, they should be taken as a
framework or a foundation upon which to build.
I think it would be advisable for you to
analyze the list of questions and see whether or not you can see what areas I
have missed, thus giving you a better perspective. I will keep revising this
page until I get as much on it as I can.
Brainstorming is one thing, but after
reviewing for a while, I know that there will be many categories that I will
add, or improve on in the future.
(Jot
it down or print the page.)
About the current
Listing
How long has the
property been on the market?
**As a sales representative, I
have all of this information available to me just by going to my computer.
Lots of times, I know these details
before I will show the property. If it is a new listing, there is a reason for
showing you and usually it is because it is good value or it fits the criteria
of what you want and has just shown up on the computer.
How many times has it
been listed for sale?
(Sometimes if you are not familiar with
the street you will not know that the property has been listed for ages and
hasn't sold.)
How many different
agents have worked on the property?
(History of a listing does not
necessarily mean something bad. Interpretation of this information can be
subject to a lot of speculation. Do not try to second guess the Vendor too
much it doesn't help.)
What was it originally
listed for?
(Very pertinent question.
Sometimes this will tend to give you a strategy to approach buying.)
How many reductions have
there been?
(Six months without a reduction
can hurt a property's ability to be desirable to neighbourhood Purchasers.)
How many offers have
been presented?
(Very tough question to get a truthful
answer. Some people tend to stretch the truth. That is why the question of
presentation is important. Agents present verbal offers to their Vendor's all
the time. What you want to know is whether the offers were physically
presented and also whether there were signbacks or open rejection. Remember,
this is a tough one to verify.)
How many showings have
there been?
(Another tough one. "Oh it gets
shown 10 times every day!")
What is the activity
like in the neighbourhood?
(Are there a lot of sold signs or is
everything for sale?)
Don't ask if
there is any flexibility in price until you see the house.
If you are not
interested at all, "who cares how flexible they are or are not."
If there is
interest at the right price, then we can discuss the flexibility of a Vendor,
but wait until you see the house.
c
About the street or building.
Are there any comparables on the
street or in the building?
(Gives you a fuller perspective on the
activity on the street.)
Are they fully comparable or partially?
(One of a kind or common.)
How long have they been listed for sale?
(Realistically priced? Now is the time
to compare listing prices with selling prices.)
How many times have they been listed?
(I can get all of this information as
well.)
What are the listed prices of these
comparables?
(Take the first group of questions and
apply here as well.)
What properties have sold on the street
in the past six months?
(Easy enough with computer access.)
At what price?
What was the last listed price of the
sales and the selling price?
(This can give you a barometer of
whether or not prices are rising or falling, but it is not foolproof.)
What was the original listing price of
the sales?
(The difference between listing and
selling price is a small measure of what is happening on the street.)
What properties haven't sold? Listed and
expired?
(It just means that they were probably
listed too high.)
What properties have expired? (The
Listing that is) and at what price?
What are the demographics of the street
or building? (If you do not
know.)
Again, if I have done my homework, I
will know what is happening on the street. As I am quite computer literate, I
can search a street or building in many ways thus getting a better profile of
what is happening. to give you an idea, I can:
Search by Address, (I can go back as far
as 1985 for information on some streets.)
Search by Assessment (I can get the
proper legal description if available plus the tax assessment and the correct
owners.)
Search the demographics of a
neighbourhood to a limited degree
Search by TLA (See who has owned the
property in the past 10 years and at what price)
Search by District (Comparative search
of properties in a given district.)
Ownership of the Property
Who owns the property? (Type
and age of person and profession could play a role here.)
How long have they owned it? (Can
make a big difference if they bought prior to 1989 and before 1987.)
At what price did they buy it? (If
a recent sale can you find out the circumstances of the deal?)
What have they done to the property
since they bought it? (Improvements
or neglect.)
Is the work they have done compatible
with other work in the neighbourhood? (Some
people haven't got a clue when it comes to upgrades and quality of
workmanship. Others over improve.)
More upgrades, less upgrades?
Why are they selling? (Tends
to lead to speculation. Better wait and see the house. Then if you are
interested, these questions may become relevant.)
(As a Sales Rep I try to tell my people not to waste their time speculating or second guessing the Vendor. Look at the house and then decide whether or not it is worth pursuing this line of questions. -Even then these questions may not give you the results that you want. Sometimes, these ideas can confuse and frustrate you rather than produce any leverage for your negotiations when buying.)
Let us assume that you have now had a chance to see the house.
Questions about the Owners
Why are they selling? (Upgrading,
Downgrading, Leaving Town,
Desperation? It will make somewhat of a difference to the way you approach an
offer.)
If this is a divorce, who has control?
(This can be a tough one to
deal with. There are a small number of cases that must go to court, but
overall they are no more difficult than a difficult Vendor selling his or her
castle.)
If this is a Power of Sale, Who is the
institution? (I have had
extensive experience with "Power of Sale" properties. Both as the
listing agent and the Selling agent. I will deal with these in the future as
it should be approached from a whole different angle.)
Where are they moving to? (May
help determine how motivated they are to see an offer.)
How soon do they want to move? (Now,
one month or six months. It
is important to know this before you make an offer. The closing may not
coincide with anything that you would be comfortable with.)
Buying Conditional
This is the most obvious way of
buying a property. The conditions usually included are Conditional upon
financing and Conditional upon inspection by a home inspector.
The wording is usually as follows:
THIS OFFER IS CONDITIONAL for a period of FIVE (5) BUSINESS DAYS FROM DATE OF ACCEPTANCE, upon the PURCHASER being able to arrange FINANCING THAT IS SATISFACTORY TO THE PURCHASER, failing which this offer shall become null and void and the deposit will be returned to the PURCHASER in a timely manner without interest or deduction. This condition is inserted for the benefit of the PURCHASER and may be waived at his sole option.
THIS OFFER IS (ALSO) CONDITIONAL until 11:59PM on (Specific date) upon the PURCHASER having the property inspected by a qualified home inspector. Should the PURCHASER find problems or deficiencies that he is unwilling to accept, then this offer shall become null and void and the deposit will be returned to the PURCHASER in a timely manner without interest or deduction. This condition is inserted for the benefit of the PURCHASER and may be waived at his sole option.
These conditions have one obvious
purpose and several not so obvious purposes.
The first and foremost is for the very
reason that you put them in the offer.
CONDITIONAL UPON FINANCING
The clause for financing allows you
enough time to have your bank, financial institution or family member with the
money, the time to give you a written commitment that they will give you the
necessary funds or mortgage money to close the deal.
It must be in writing before you waive
this condition. There have been instances where the bank did not give a
written confirmation and then when it came time to close the deal, backed out
leaving the PURCHASER scrambling to find another institution to finance the
closing.
If they don't give you confirmation, you
don't waive the condition, therefore, you start all over. Most people know
approximately what they can afford and if the institution does not give them a
go ahead, they should not waive the condition.
(I might add that if they don't, take
your business elsewhere!)
CONDITIONAL UPON INSPECTION
Most people look at a property, they
do not inspect it. The fact that most people have some knowledge of mechanics
and the dynamics of construction, doesn't mean that they have the ability to
detect major flaws in the condition of a property.
Paying someone $200 to $300 dollars to
inspect a property thoroughly is good sense and makes for a more realistic
assessment of the condition of a property.
Resale homes or apartments are not
always in rough shape. Sometimes you can get one property on a street that is
60 years old, but has everything upgraded. This is great if the upgrades were
done professionally or properly. If they were done cheaply or if there were
things that were done wrong then it is best to know before you firm up the
deal whether or not you have a lot of work (and money!) ahead of you.
Namely to protect your interests in obtaining the property without having to worry about someone else coming along and buying it out from under you before you have had enough time to verify whether or not you can afford the property or whether there are any major deficiencies that will cost you too much money if you close the deal.
The other not so obvious reasons for
putting in these conditions are as follows:
Putting these conditions in, can
be a smoke screen. The legality of how you make an offer is
something I will not comment on, but there are many times when one uses
Conditions for purposes other than what they were designed for.
Sometimes I have been asked to put a
condition in that I know is not necessary. Financing is one of those
conditions. In some cases, some people could afford to pay full price or
even more than asking price, but they still put the condition in to:
1) Get a property for a little less than
asking (Sometimes a lot less)
2) To have some time to decide whether
or not they want the property.
1) The Purchaser does not want the
Vendor to know that they can pay cash for the property. Sometimes
Vendors who know that the Purchaser can afford more, will tend to push for
more money. Situations
do vary.
2) Just to make sure that there is
nothing else that would be more desirable that they should consider buying and
having control of one property gives time to examine others
Categories that I will try and add
The Offer
The Tactics of Offers
What to include in the Offer
What to Avoid
Negotiations and Signing Back
Analyzing the deal before signing as
firm
Remember I am in real estate and time is usually at a premium. Check back and look at the revised date at the top of the page for additions.
Revised October 00