How to Negotiate a Home Purchase Brought to you by: Canadian Mortgage Services
Introduction Let's face it, few of us really like negotiating and all the back and forth arguing it implies. If left the choice, we will go to great lengths to avoid having to confront another person's opinions and best interests. However, when it comes to the purchase of such an important piece as a house, you would make a huge mistake not to try your hardest to have that price go down as much as possible. In this presentation, we will show you how to do it as well as how to avoid the most common pitfalls.
Set Your Limit from the Start Before you even begin the bargaining process, it is essential to determine a maximum price you will not exceed under any circumstances. When you're involved in negotiations, much like with auctions, you can quickly get carried away and lose sight of the real objective (buy a house at the best possible price). Setting a limit right from the beginning will ensure you stay within your budget.
Downplay It Let’s imagine that, upon entering the property, you find out it's the house of your dreams, the home you've been searching for all along… You might be tempted to get overly enthusiastic and express your joy and readiness to get the deal underway. DON’T. Keep a poker face unless you wish to get pounced on like sharks on bait. Always assume a detached demeanor.
Your First Offer You need to do your homework before you make any kind of proposal. For starters, find out for how long the property has been for sale and if any price drop has occured since then. Try and discover if any similar housing has been recently sold in the neighborhood and for how much. All this information will represent your ammo to use in order to lower the starting price.
If the house has been on the market for more than 2 months, you can afford to go even lower. However, don't go too extreme and insult the seller with a lowball, unrealistic offer. Stay reasonable.
In Their Shoes... Another important piece of the puzzle is to find out what the seller wants/needs. Why was the house put up for sale in the first place? A divorce, a death? In some cases, the seller might have to sell fast because he either needs the money or wishes to get rid of it as soon as possible. Ask questions to determine if he might just want to pay his mortgage back or expects a return on his investment. Understanding the other party's motivations will not only give you more bargaining power, it will help you build rapport and maybe obtain an even better deal.
"Come Back" Price Following your proposal, the agent or seller will return with a counter-offer. That's where the accuracy of your first offer reveals all its importance as that counter-offer will be largely dependent on it.
If that amount doesn't meet your expectations, develop more arguments. For one, let the seller know you're still hesitating between several properties and the other houses are a couple dozen thousands cheaper. Also, donâ€™t be afraid to show him that you're ready to walk away. Youâ€™ve got other options, after all...
Team Up with a Real Estate Expert Even with the knowledge developed here above, nothing really beats field experience. Thatâ€™s why it might be a good idea to get the help from a veteran real estate agent whoâ€™s been working in the area for a long time and who knows the market like the back of his hand. He will be able to give you valuable advice to send your offers or help you separate the good deals from the risky properties with hidden defects and other hazards.
Conclusion Before you embark on your home purchase journey, you need to understand you will have to play the negotiating game. Unless you buy a turnkey property, you will need to face a seller whose goal may be to get the most money out of this dealâ€Ś but not necessarily.
By following the tips we have shared with you in this presentation, you should be able to find out all you need to in order to put all the chances on your side and come out on top.
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