A home is the biggest purchase most of us will ever make, so it’s only natural to feel a little intimidated by the negotiation process. This is particularly the case for first-time buyers. Here are some tips to help you approach the negotiation process that will help you minimize stress, stay within your budget and get the best price for your new home.
Get to know your Market
Becoming familiar with the types of properties available in your price range is an important first step. With the help of a real estate professional, you’ll also want to begin exploring neighborhoods you’re interested in, the types of properties available in those neighborhoods and their prices. Make note of the difference between listing and sale prices and how factors such as size, location, amenities, proximity to schools, and the age and condition of the home affect price.
Familiarity with the market will help you understand the value of the properties on the market and put you in a stronger negotiating position. While online listings are a good place to start, most buyers should expect to look at 10 to 15 homes in person before they make the decision to put in an offer.
Buying your first—or even second or third—home comes with a lot of excitement and becoming emotionally attached can be easy. When looking at potential options, it often doesn’t take long to start imagining your new life there. However, it’s important that buyers do not act overly enthusiastic, particularly when the seller is home. This can put your Real Estate Agent at a disadvantage when negotiating for the best price. The best approach is to keep your demeanor neutral, take notes, and keep your thoughts and questions for a private conversation with your Real Estate Agent.
Focus on Value
When considering making an offer, many buyers assume that the asking price will be different from the selling price. In certain markets, buyers may expect the property to be listed higher than what it will sell for, while in hot markets, the opposite applies.
Rather than focusing on the listing price, focus on the value of the property. If the property is priced properly, the best strategy is to offer the listing price. If the property is not priced properly, make an offer that reflects the property’s true value. The best way to assess this is by getting to know the market and discussing your options with your Real Estate Agent.
A common mistake some buyers make is to put in a low offer, just to see if the seller is receptive to it. The result is often that the seller doesn’t take the offer seriously, either coming back with the original listing price or not responding at all.
Remember that just as your Real Estate Agent is advising you, there is also a Real Estate Professional advising the seller on the home’s value.
Think Beyond Price
Don’t forget that price is not the only point of negotiation –terms are negotiable too. Everything from the move-in date, to home repairs, to which appliances are included in the sale is up for negotiation.
Stick to your Budget
Firmly establish a budget and stick to it. In markets where demand is high and inventory low, it can be tempting to increase your budget, especially if you have put in several offers without being successful. However, it’s important to stay within a budget that you will be comfortable with for the next several years. Make your best offer and don’t budge. Home buying can be emotional, but try to keep a cool head by reassuring yourself that there will always be another house out there.
What’s my Budget?
When starting the search for a new home, it is important to establish a budget that you will be comfortable living within for several years. There are several handy tools to help you calculate your housing budget and plan your monthly expenses. Canada Mortgage and Housing Corporation’s Household Budget Calculator allows you to compare your income with your expenses and debt payments and see what kind of mortgage you can comfortably afford.
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