A home is the biggest purchase most Canadians will ever make in their lifetime, so getting a good deal matters. Some people imagine that getting a "good deal" on a house involves stumbling onto an unsuspecting and desperate seller who is willing to give the house to the first willing taker: this is nothing more than a dream.
Home sales are normally negotiated between two informed parties who are going to act in their own best interests. In a balanced market, the seller will have other interested buyers to choose from, and the buyer can simply move on to the next available property on his short list. In a hot or a dull market, things could be different. Therefore, a good understanding of the current state of the real estate market in the desired area will aid your negotiations.
While playing hardball to get what you want at the price you want, you risk over negotiating and being left empty handed. Keep emotions out. Experts advise treating a home purchase as a business transaction. Getting emotionally attached to a home eliminates any leverage during negotiations. The minute you get too emotionally attached to the house, you will not be able to negotiate the best deal.
As with every business deal there are many items to be negotiated such as:
1. Home price.
You can negotiate home price—the asking price is just what it says. It is not the price that you have to pay to buy the home. So, negotiate the home price!
Make your first offer less than what you can afford to pay. Have your agent provide a list of comparable homes in that neighbourhood that have sold over the last six months or year. Compare their sold prices with the list price of the house you want to buy. These sold prices will serve as a guide as to how much lower than the list price you can possibly pay.
Make a note of the number of days it took for these homes to sell. If the home you want to buy has been on the market for a longer time, the list price may not be realistic and you may be able to make a deal for a lower price. Sellers can become somewhat desperate if they really have to move and their home has been on the market for a long time, say longer than 60 days.
Do not be afraid to make small changes in the price you are offering. Your object is to find out how much, if any, the seller is willing to lower his asking price. The seller’s willingness to lower the price should be apparent on the first or second counter offer.
2. Closing date is also known as the moving day.
The closing date can be negotiated if the buyers or sellers do not have a definite moving date. Some deals cannot be agreed upon because the closing date is immovable by the buyers or the sellers.
3. Conditions such as financing, home inspection, ability to insure the home, seller holding a mortgage.
The conditions usually have to be satisfied before the end of a mutually specified period. This means that you have to finalize the financing details with the lender or mortgage broker as well as have the home inspection completed and any other conditions concluded by the end of this period. These conditions can be removed from the offer by the buyer signing a waiver that becomes part of the Agreement of Purchase and Sale.
4. Deposit amount
The deposit amount can vary depending on the price of the home and its location. It can be as low as $5000 and much higher. The deposit is usually paid upon acceptance of the offer. The deposit is held in trust by the listing real estate company or a lawyer. The deposit amount becomes part of the selling price on the day of closing also called moving day.
5. Chattels and fixtures (included or not included).
The chattels include things that are not fixed, bolted, nailed, or otherwise permanently attached to the building. Stoves, refrigerators, clothes washers, and dryers are examples. The built-in dishwasher is not a chattel. But it is usually listed in the offer as being included.
If in doubt about which items are included, write it into the offer. Possible rental items such as the hot water tank, water softener, other appliances, and even the furnace should be noted in the offer. Usually, any rental agreements for appliances like the hot water heater or even a furnace with the seller are transferred to the buyer.
Do not hesitate to include in your offer, items that are in the house that you want but are not included in the listing. If you don’t ask you won’t get it.
6. Other terms of the agreement.
Other terms of the Agreement of Purchase and Sale can include further visits to the property by the buyers before the closing date, a statement by the seller that the appliances included in the deal will be in good working order on the closing date, statements by the seller that the property has not been used as a grow house for illegal substances.
Normally your real estate agent meets with the listing real estate agent and the sellers to present your offer. Your first offer may be accepted but probably not. The sellers can sign the offer back to you with some changes. This is called a sign back or counter offer.
Your real estate agent or lawyer can lead you through all the necessary signing and initialling required when making the offer and the subsequent sign-backs. If the seller refuses to sign back your offer, all is not lost as you have the option of making a new offer at any time. Offers can be signed back and forth between the buyer and the seller several times before a deal is reached. The key is to be patient.