Ques­tion: 

I’m hop­ing to buy a home soon, and now that I’ve got­ten my­self sit­u­ated and have learned a bit about the process and the mar­ket, it’s time to start look­ing more se­ri­ously. Be­cause my cri­te­ria is pretty spe­cific, I’d like to be pre­pared to quickly make an of­fer when the time comes. Ob­vi­ously I want to get a good price, but I’m new to the con­cept of bar­gain­ing and ne­go­ti­at­ing. I don’t want to mess it up and lose the per­fect home! What fac­tors do I need to con­sider?

Ian's An­swer:

As a buyer, be­ing fully pre­pared prior to an of­fer is the sin­gle most im­por­tant as­pect in ne­go­ti­at­ing to win. “It goes be­yond the con­scious de­ci­sion to pur­chase, re­ceiv­ing pre-ap­provals, and men­tally pre­par­ing your­self for the next step in your life,” says Ian Charlebois.

As a buyer, be­ing fully pre­pared prior to an of­fer is the sin­gle most im­por­tant as­pect in ne­go­ti­at­ing to win. “It goes be­yond the con­scious de­ci­sion to pur­chase, re­ceiv­ing pre-ap­provals, and men­tally pre­par­ing your­self for the next step in your life,” says Ian Charlebois.

A seller’s vary­ing re­ac­tions, depend­ing on what the buyer sub­mits as their ini­tial of­fer, can de­ter­mine whether the home­owner sells or not. The seller will be hes­i­tant with any of­fer re­ceived, no mat­ter how high or low it is. “Nat­u­rally the seller is on the de­fen­sive and will con­tinue to be un­til they are ‘sold’ or re­al­ize that the cur­rent of­fer ‘is what it is’ and make a fi­nal de­ci­sion,” Mr. Charlebois says.

He ex­plains that most home sell­ers, af­ter con­sult­ing with a real es­tate pro­fes­sional, know the true value of their home and use MLS as a tool to re­ceive top dol­lar. Of­ten homes are listed high, with the in­ten­tion of ne­go­ti­at­ing.

For buy­ers, the ac­tual de­ci­sion to go for­ward with an of­fer is made based on tan­gi­ble and in­tan­gi­ble fac­tors which af­fect spe­cific buy­ers. Be­fore sub­mit­ting an of­fer one must con­tem­plate the of­fer price ver­sus the list price. But the buyer wants the low­est sale price pos­si­ble and of­ten wants to make that their of­fer.

“It’s im­por­tant to as­sess the sit­u­a­tion: what is the ac­tual true value of the home, the tan­gi­ble and in­tan­gi­ble items that will af­fect your de­ci­sion to buy or not, what is the home worth to you and what is the dif­fer­ence be­tween the true value and what it is worth to you. Eval­u­at­ing these fac­tors will help to lay ev­ery­thing all out in plain view,” ex­plains Mr. Charlebois.

How you go about an of­fer will strongly in­flu­ence the out­come. “The lower un­der the true value you go the harder it be­comes. Re­mem­ber you are try­ing to win, not lose. Af­ter thought­ful con­sid­er­a­tion and mar­ket anal­y­sis a true value will be­come ap­par­ent. As a buyer the main fo­cus is get­ting the prop­erty for the best price – know­ing the fi­nal true value will sug­gest a start­ing price,” Mr. Charlebois says.

An ini­tial of­fer should in­clude all terms/con­di­tions (clos­ing date, du­ties of each party, in­clu­sions) spe­cific to the buyer with ev­ery de­tail in­cluded. Buy­ers should be flex­i­ble to the sell­ers’ re­quests, but the goal is to elim­i­nate other fac­tors leav­ing only price to dis­cuss.

Things to con­sider: What is the ex­pected re­sponse from the sell­ers? Should they be given 24 hours to re­spond or pres­sure them to de­cide quickly? Should you in­clude/ex­clude any terms/ con­di­tions that the seller wants, know­ing they will counter with those re­quire­ments and give you a bar­gain­ing tool you can use with­out los­ing any­thing?

“Your agent can help you to de­velop an ex­e­cu­tion plan for dif­fer­ent sce­nar­ios that could oc­cur in re­sponse to your of­fer,” says Mr. Charlebois. “It is all about win­ning dur­ing ne­go­ti­a­tion – but the seller shouldn’t know you, as the buyer, did.”
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Featured in the Ottawa Citizen on 05 February 2011