Bargain hunters! Are you looking for a few hints and tips for getting the best deal when buying a property? In a buyer’s market, the key to getting a good deal is knowing just how much you can get away with…
Start by asking questions. Can the price be reduced? Can you try to negotiate some repair costs? Can you find homes where the seller is desperate to sell? Can you get more inclusions? Employing one or more of the following tactics might make all the difference in how much you pay for your next home.
1. Watch the dates. Try to find out how long a home has been on the market.
Newly listed homes are just starting out. Owners are usually less willing to negotiate price at the start of their selling journey. They may be anticipating buyers clamoring over one another with multiple offers.
If you’re looking to get a better deal, it’s probably best to steer clear of newly listed homes, unless they have banners shouting “Must See” “Vendor Renovated” or “Let’s Deal”. Instead, begin by touring homes that have been on the market for 60 days or more. These sellers are more likely to consider lower offers. They may not accept your offer, but it’s a great starting point for negotiating a final price for less than the original ‘ask’.
2. Watch the prices.
Has the asking price on a particular home been reduced? Has it been reduced more than once? Have more features been added?
Go view these homes and ask questions. Find out if they are owned by ‘motivated’ sellers. Most homebuyers want to offer less than the asking price. It’s human nature. We’re all looking for a deal! However, lowball offers may not be received well by sellers who have just listed their home and feel that their asking price is already more than fair. Less motivated sellers will want to ride the market for a while, hoping to sell only when someone comes along with an offer that matches their asking price.
You should also prioritize homes that are advertising price deductions. Talk to the sellers and find out what their motivation is for selling. If they are being transferred for work, or trying to move before school starts again, or are otherwise pressed for time, there may be a deal to be made.
3. Encourage the sale with a ‘timed’ offer.
If you write an offer to purchase, make sure you give the sellers a very short time to accept the offer (24 hours or less). This way, they will have little time to reconsider or change their mind. If you give the sellers too much time to accept your offer, it also allows more time for other buyers to submit their offers, which could be exactly what the sellers want. Act quickly!
And finally, if you’re going to make the deal, get the sellers’ signatures ASAP! Once the offer is signed, the decision effectively becomes final.
4. Get a home inspection.
Unless you are an expert handyman, you should always get an inspection. However, what if the home inspection comes back with repairs or hidden costs that neither party knew about?
According to contract law, unacceptable repairs are a way for buyers to remove themselves from the sale contract. You may consider this if you don’t want to, or simply cannot deal, with repairs or renovations right away.
But what if you don’t walk away? Well, you can use this information to renegotiate the contract instead. Perhaps there could be major price reduction, or the seller may provide you with a cash back incentive to cover the cost of the repairs. Either way, be sure to negotiate enough funds to cover the full cost of any repairs. This may mean getting quotes from local businesses. However, unlike car repairs, the lowest quote may not be in your best interest! For example, you don’t want a quick putty job when you have a cracked foundation and rotting floor joists on your hands. A higher repair quote may also allow you some flexibility in negotiations.
5. Allowances for upgrades and changes.
Many buyers are discouraged when looking at homes that need carpet replacement and/or an extreme makeover in rooms like the outdated bathroom that was hip thirty years ago… but these items need not to frighten you away from buying the home. So, what if the current owners have painted the walls fluorescent pink or otherwise train-wrecked a series of “DIY home improvements”?
Write your offer in accordance to the changes you require, so that your purchasing of the home is conditional upon certain improvements. Ask the seller to give you a renovation or upgrade ‘allowance’ to cover the cost of changes or upgrades that are needed. Once again, be sure your cost estimate is adequate and realistic enough to cover the charges of a professional doing the work.
6. Reduce or include your closing costs.
In a slow seller’s market, some innovative negotiating may be used, such as employing the legal fees or closing costs as negotiating tools. If all other aspects of negotiating are over and you do not feel you’ve received a ‘deal’ whatsoever, try this one: write into your contract that all closing costs are to be covered by the seller.
7. Investigate circumstances surrounding the sale.
More often than not, the reason a person is selling their home is the key to negotiating. If the seller doesn’t outright tell you why they are selling, talk to neighbors. They usually have some informative tidbits that may help you out. They may have heard something about a divorce, job loss, death in the family, winning the lottery, inheriting a mansion in Palm Springs… the neighbors always know. Highly motivated sellers are usually willing to look at all offers, whether they are high or low. Investigate the circumstances for yourself to find the best strategy for the deal.
8. Do your homework.
Find comparable sales available that show prices comparable to the home you are offering to purchase. If you provide other properties that can justify the price you’re offering, the seller is likely to take your offer much more seriously. Research and compile the comparables that best suit your needs.
9. Ask for everything.
It’s like that saying: “ask for everything and expect nothing.” When writing an offer, ask for everything you can think of. Even stuff you don’t really want that bad. This shifts the seller’s focus off the price and now they have to factor in their dishwasher, curtains, garden shed, washer and dryer, swing set, trampoline, barbeque, gym equipment, snow blower, ATV, or whatever else you choose to include in your offer.
10. Limit the terms.
Nothing closes a real estate sale faster than reducing the number of terms or conditions in an offer. Writing a good, solid offer can sometimes save you money. If you are pre-approved, bring that paper to the negotiation table. Shorter possession date, faster condition removal… all have negotiating power behind them. The least hassle and waiting expected from the seller, the more likely they will accept a lower offer.
Now the negotiations begin.
Check out the Canadian Home Find Buyer’s Guide … and save yourself thousands in costly mistakes.