The power of negociation
“There is never a single fixed price. Every property has both a floor and ceiling price says Patrick Juanéda, President of the Quebec Federation of Real Estate Boards (FCIQ). The price is always negotiable. Expect the average reduction percentage to be from 2 to 3%.”
The real estate expert does stress however that each situation is unique: “If a house is listed at a good price (near the floor price) and it’s located in an active market (single family homes around $300,000, for example) overbidding can’t be ruled out. Do you really want to miss out to save a few thousand dollars?”
On the other hand, you have more room to manoeuver with a property that has been on the market for over six months and seen little activity.
Recognizing various scenarios forms the basis of any negotiation. A qualified real estate agent has the experience and instinct to guide the buyer. Without one, you’d have to study the local house listings and visit a lot of properties to develop a flair for negotiation.
Presenting your offer to purchase
According to Patrick Juanéda, an offer to purchase should be made within 24 to 72 hours following the house visit… except for hot properties where waiting would be detrimental to the acquisition. Here again, knowledge of the market is the key in order to avoid displaying too much interest too soon, or missing the boat entirely.
“Never make a verbal offer,” cautions Patrick Juanéda. Instead, try to remain friendly and calm during the visit, and then present a written offer to purchase.
“You can make verbal comments when you present your offer, to explain, for example, that the outdated kitchen was the reason why you offered less than the asking price, all based on recent comparable sales,” explains the expert.
Strive to maintain a friendly negotiating atmosphere. An aggressive approach or negative remarks about the property are ill advised. “Selling a home can be an emotional experience,” says Patrick Juanéda. “Generally speaking, people want to sell to people who are sympathetic to them.”
Responding to the counter offer
While not automatically the case, it’s not unusual for sellers to make a counter offer. After all, just as the seller lists his house at a price that leaves him some negotiating room, the buyer generally doesn’t present his top price in the offer to purchase… and that’s just part of the game.
“Exchanges of this kind are par for the course,” assures Patrick Juanéda. “During negotiations with the seller, you benefit by determining what conditions might make your offer more attractive: would advancing (or delaying) the occupancy date be a good sales argument? And what about compensation or items included in the sale?”
By focusing solely on the price during the transaction, you might neglect several negotiating points that could save you money.
Building inspections
Lastly, most offers to purchase are conditional upon a building inspection. In that regard, Patrick Juanéda warns potential buyers: “Never, ever view the building inspection as a reason to renegotiate.”
Naturally, depending upon the results of the inspection report, some financial compensation might be warranted. “These aren’t discounts,” warns the expert. “They must be actual defects detected during the inspection. Compensation is designed to not only compensate the buyers for any risk to property value, but also to release the seller of any legal responsibility.”
At the end of the day, the objective is to pay a fair price. When that happens, both the sellers and the buyers are convinced that they’ve make a good deal.