How to Make an Appealing Offer When Buying a Property
A recent report by economist Derek Holt of RBC economics put a positive spin on the Canadian mortgage market due to innovations such as 30 and 40 year mortgages.
Holtz says that unlike the regular 25 year mortgage of 1980s, the past year has seen the introduction of extended amortization mortgages to broaden the ways in which households can cope with higher payments through higher mortgage rates.
Let's not suppose that negotiating is adversarial. Yes, you the buyers are on one side, the side that wants to buy for the lowest price. And yes, the seller is the other guy, he who wants to sell to the highest price. However, it's more productive to look at negotiation as a problem-solving process. You are a willing buyer and the seller is a willing seller. We just have to work it out. You are united in the goal of consummating a deal. You simply have different ideas about what price the property should go for. The challenge is to resolve the differences.
You have to arrive at a mutually agreeable selling price for a sale to go through. Sometimes this happens quickly, and sometimes it takes a while.
Staying power can be your ally, as sometimes rushing the process will end it more quickly. In fact, you may even be better off leaving the process for a bit if you think the asking price is too high. Sometimes a seller when he first lists is testing the market to see what might happen. If this is the case, the best strategy is to offer nothing until the sellers are close to dropping their asking price. Be wary. You could end up paying a higher price of other buyers suddenly become interested.
In order to be sure you know that the sellers are contemplating dropping the price, get your agent to talk to the sellers agent and make sure the sellers are aware of your interest. Don't be shy about being interested, you are interested but not at the current price. This way, hopefully the sellers agent will keep your agent posted regarding when the sellers decide they'd like to see an offer from you.
When you make an offer and there is no competing offers your initial offer price should give you room to move up. However it should not be so low that it is insulting to the seller or otherwise the seller could develop an attitude toward you and may not respond at all.
Buyers often think that if they start too high initially they'll end up paying too much. Perhaps not. Your initial offer price should be good enough to tempt the seller into negotiations. It's a price to get the ball rolling. From there, you need only move up in small increments, if necessary.
Don't get so caught up in price that you fail to notice other opportunities for enticing the seller into accepting your offer. You and your agent should come up with all the ways that you can accommodate the sellers. For example, can you meet the seller's desired closing date? If so you may want to hold off on offering this information at the beginning so that you have something of more value that you can offer the sellers in exchange for better price.
When your very close on the price offering, to split the difference can often put the deal together.
TerriAnn Ford is a Guelph Ontario Real Estate Agent. She specializes in finding homes for her clients in Guelph Ontario and surrounding area.. Ford is an Accredited Buyer Representative and also offers free foreclosure listings to people looking for a bargain in real estate.
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