When buying or selling a home, your main focus is to get the best possible price. As a buyer, that means negotiating the lowest possible price, and as a seller, you’ll be motivated to keep the price as high as possible. Regardless of which side of the transaction you are on, you’ll want to get the best deal possible.
Although you’ll use a realtor for guidance in your transaction, these five tips for negotiating the price of a house are a great place to start.
1. Understand the Market
Before jumping into the negotiation process, knowing whether you are in a buyer’s or seller’s market is essential. If you’re negotiating the price of a house in a buyer’s market, there will be more homes for sale than there are buyers to purchase them. In this case, the buyer will have more power to offer under the list price and can negotiate since there are other homes from which to choose.
On the other hand, a seller’s market puts the seller in a power position because there are fewer homes than buyers, and buyers will need to compete against each other. In this case, the seller can negotiate aggressively since plenty of other buyers are willing to make an offer on their home.
Real estate markets are very regional, and what is true in Toronto may not be accurate in other cities like Edmonton or Victoria. Check websites like the Canadian Real Estate Association (CREA) or the Canadian Mortgage and Housing Corporation (CMHC) to discover what’s happening in your local market. Check out your local real estate board for a closer look at your regional market.
2. Research Your Seller
Knowing the person on the other side of the transaction is always beneficial in any sale. Understanding their motivations can help you negotiate, giving you additional leverage if they are highly motivated.
On the other hand, if the other party is facing unique challenges with their living situation, you may be able to tailor your offer. For example, a buyer who hasn’t sold their existing home yet may benefit from a more extended closing period to give them time to fulfill this requirement.
On top of learning about the other party, you should also research the property. Public records can be a great source of information regarding a property you want to purchase. Still, even sellers can benefit from knowing what information is available about their property.
3. Get Creative with Negotiations
Negotiating the price of a home isn’t just about the price. Here are some terms that you are free to negotiate beyond the price:
- The length of time to close
- Conditional clauses like inspections, financing, or the sale of an existing property
- The timeframe allowed for inspections
- The inclusion or exclusion of chattels like appliances, curtains, and innovative home technology
- Repairs to remedy issues in the home or credits on the price to account for defects
- Closing costs and additional fees
4. Negotiate Through Your Agent
While it may be tempting to think you could get the best results by cutting out the intermediary and negotiating the price of a house directly with the other party, think again.
Instead, negotiate exclusively through your real estate agent. Dealing with a third party helps because it stops you from personalizing the other party. This strategy keeps the end goal (to get the best price) at the forefront of your mind.
In addition, real estate agents are shrewd negotiators – it’s one of their essential functions in the homebuyer process. Negotiating without your real estate agent would be like representing yourself in court – leaving it to the pros is best.
5. Expect to Compromise or Move On
As the saying goes, you can’t always get what you want, and when it comes to home buying, it’s unlikely that you will get the price you had in mind. Try to enter the negotiation process prepared to compromise and work with the other party to ensure your needs are heard. If you’re working with an agent, ensure you’re on the same page about expectations and deal breakers.
Remember that not every deal goes through, and it’s common to negotiate several times in the process — especially if you’re in a competitive market. Consider negotiating the price of a house a learning experience, and not every negotiation results in a sale.
You’ll need to arm yourself with information to negotiate the best deal on the house. This starts with researching your local market conditions and expands to information about the property and the other parties involved. You must be flexible on terms and conditions and trust your real estate agent to negotiate.
Remember that negotiation is all about compromise, and you’ll most likely need to concede a few points to close the deal. But if you keep these tips in mind, you’ll be successful at negotiating the price of a house.
Looking for the best team to help make your next purchase a success? Get in touch with IQI Canada, and they’ll be happy to help you make it happen!
