Found the house of your dreams? Now the negotiations begin. Start by learning as much as you can about how much the property is worth.
Check the Comparables
Your agent should have up-to-the-minute price data at hand to help you analyze any comparable properties. Although every home is unique, here’s some of what makes a home ‘comparable’ to the one you’re considering:
• same neighbourhood
• same age and condition
• same lot size
• same home style – equivalent living space, number of rooms and baths
• similar Terms of Sale
Follow Sales Price Trends
Ask about recent pricing trends in the neighbourhood. Specifically, what has been the average difference between listing price and sales price for recent sales of comparable homes? What is the ratio of assessed value to market value?
Offer What You Think The House Is Worth
Some asking prices have built-in padding, but others are already priced to sell. You could lose a well priced home with a low ball offer. Remember, lower mortgage interest rate will allow you to borrow more and pay a higher price for a home without increasing your monthly payment.
Spell Out The Details
Consider getting a pre-purchase home inspection and include a condition making the offer subject to a satisfactory inspection report. A home inspection will help identify any potential problems you may have overlooked.
The offer can also be conditional upon a lawyer’s review, the sale of your current home, arranging an acceptable mortgage, etc. Conditions are typically used to smooth acceptance of an offer without delaying the final decision. Too many conditions, however weaken your bargaining position.
Know What’s Important To You
Prioritize the elements of the sale on paper (‘must’ and ‘want’) and decide where you have negotiating room – what you will give up or accept in exchange for a concession. Items frequently negotiated include adjustments for needed or requested repairs, what personal property stays and what goes with the seller and the closing date. Knowing exactly what you want and where you are willing to bargain is your most important negotiating tool.
Negotiating could take several days. Be patient; you don’t want to rush into one of the most important purchases you’ll ever make.