It’s no secret that Canada’s Housing market is on fire, Houses are receiving multiple offers and normally selling over asking price. People are even struggling to have their offer accepted, forget about buying it below asking price.
What if I tell you, I have bought properties, one last year in 2021 and this year in 2022 and both are below asking price. Especially, in the last 1-2 years, the real estate market went crazy and finding anything below market price is un heart of.
No one wants to pay extra money for a house or property because it increases down payment and more I pay means I have less money to buy more deals.
if the bank calculates the property value is $1 Million, it means you have to pay 20-25% down payment and the rest of the money can be financed by a bank which we call a Leverage. Let’s say this property is listed for $1.2 Million instead of $1 Million.
It means we have to pay 25% of $1 Million + $200k (anything above $1 Million) = $450K instead of just $250. This is a big problem if I want to grow in the real estate business.
SO, LET’S TALK ABOUT THE EXACT WAY
SET YOUR CRITERIA AND START GETTING EMAIL LISTINGS FROM YOUR REALTOR
This is the first step of getting the properties in your inbox and now check every single listing comes daily, so you know the price range for each property.
SET THE SYSTEM TO FIGURE OUT THE DIFFERENCE BETWEEN DECENTLY OK DEAL VS BAD DEAL
There is no good deal anymore, so you must find a decently alright deal for which is not listed for extremely high price.
For Example, you can say any property with 90-100k rents should be around $1.5 million to make decent returns and if property is already listed for $2 Million, then it’s very low chances to bring down the price that much. In this case, property should be around $1.6-$1.7 million and which you wish to buy for $1.5 Million.
Let’s say you found such property, now you have to ask your realtor to check right away if some offers are coming in. If there is no offer within one week or so then you have very good chances to negotiate the price but you will have to wait a bit longer to give an offer for the seller to become desperate.
But if it’s a good price, there will be offers, so let’s see what you can do next when there are a lot of offers.
LET’s SAY THERE ARE LOT OF OFFERS
Now, if you give an offer at this point, you must pay over the asking price to beat other offers. There is no way to get this property below asking price with multiple offers.
YOU SHOULD NOT PUT YOUR OFFER AT THIS POINT.
You just need to wait for some other offers to get accepted and now buyer and seller will finalize some date visit, Inspection and Financing to close the deals. Your realtor can find out these dates for you as the seller’s agent must disclose these dates.
Now you keep a note of these dates and specially financing dates.
As the Financing date deadline is approaching, you ask your Realtor to get in touch with Seller’s agent to find out how financing is progressing.
Normally, the seller agent will know even 1-2 weeks prior to the deadline if this deal will close or not. If the deal is closing successfully, you just move to the next property.
IF BUYER FAILED TO GET FINANCING
But if not, you will be surprised to know 2 buyers failed to get financing for the property which I am buying right now.
This is when Seller’s desperation starts because they have been sitting in the market for a few months now and buyers are not able to close the deal because of financing issues. Most people won’t even look at this property because it’s already 2 months old listing and a lot of people start questioning that something is wrong with the property as it didn’t sell. Everyone wants the HOT DEAL only.
NOW IS YOUR CHANCE
Now, this is your chance to negotiate because there is no competition, no one else is checking for this property.
You can just offer a reasonably good price, You can’t low ball it too much then you will lose this deal.
My last 2 properties are below asking price and I was not the first one as a buyer.
Even though I bought it in 2017, I was not the first buyer.
This is not a complicated process, it just needs some patience and a good realtor who can work with you. Most of the realtors want to sell your house and get their commissions.
Maybe you can get yourself a realtor license to do the deals and you will also save on buyer commission, that will be a lot of money just getting as commission.