Often buyers are under the illusion that a single proposal, just the right one, is enough and are able to buy their dream home. However, the process is not that simple and leads to many frustrations and bad decisions, which can easily be avoided. For that, preparation is the keyword ! Therefore, we give you 8 tips for negotiating the purchase of a home.
1. KNOWING TO SPEAK IN TERMS OF THE CONTRACT
Most of the time, buyers are completely unaware of what information they must present for the seller to consider his proposal. This tends to get worse in cases where buyers are buying their first house for sale in Langley BC.
But it’s simple! Everything presented in a purchase proposal goes directly to a promissory purchase and sale contract (CPCV). In other words, the better the proposal is structured, with all the critical points of the contract mentioned, the easier it will be for the seller to interpret his proposal and compare it with others.
2. DEFINE FROM THE BEGINNING WHAT YOU WANT
I often see buyer customers feeling disoriented in the process of negotiating the purchase of a home, essentially due to a lack of strategy. In the sense that, initially they proposed X, the seller counter proposed Y, and buyers were at a loss as to what to do.
Again, preparation is the keyword! It is very important to define your strategy from the beginning, that is, to know how far you can go in the various aspects that make up the proposal:
- What is the maximum purchase price you can afford?
- How much money do you have available for the down payment?
- Can you be flexible with purchase terms?
- If there are contingencies, can you manage them separately, so as not to interfere with the process?
After defining these aspects well, you already know where to start and from here, depending on the response you get from the seller, you can quickly check at what point it is possible to change your initial proposal and gain an advantage in the eyes of the seller.
Keep in mind that not all salespeople are the same, some value the money more at the entrance, others the deadline for leaving, others the overall value of the business, etc.
3. ACT FAST, OR BE, ACT NOW!
Especially at this time of high competition, when demand is high and supply is low, acting fast is essential. If you are interested in a property, make your reflection and your proposal. It is convenient that you do not miss more than 48 hours in this phase. This will be an advantage in 2 moments:
- It becomes serious in the eyes of the seller, as he formalizes his interest up to 48 hours after visiting the property.
- Reduces the space for new proposals from third parties (remember that you are not the only one looking for a home)
If you receive a counter offer, you must reply within 24 hours. The simple fact of receiving a counter offer and not just a simple “No” or even silence, means that it is being considered by the seller. Having established a relationship, it is crucial that you keep it to your benefit so that you can get it to work with the seller.
4. FOLLOW THE REQUESTED PRICE
When outlining your acquisition strategy, you will be prepared for the moment of negotiating the purchase of a home value.
Probably your initial proposal will be relatively lower and the counter proposal will be higher than what you are willing to accept, the recommendation involves trying to reach a compromise that is satisfactory to both parties. The so-called win-win.
You should increase the overall value, within the common sense of the proposal in question, in order to achieve your objective. This climb, in the eyes of the seller, will represent a moral victory.
5. BE FLEXIBLE WITH DEFINED DEADLINES
In most cases, a short writing period (up to 30 days) is what a salesperson wants to hear! However, as a rule, only when it is a cash deal is it possible to get such a short term, since those who resort to bank financing usually ask for between 60 to 90 days.
There is also another side of the coin, where short terms are frowned upon. Especially when the owner still needs to live in the house while he has nowhere else to go. In these situations, owners tend to like proposals more where there is flexibility to extend the term, for example to 120, 150 or even 180 days.
Try to know during the visit the reason for the sale to adjust your proposal according to what the seller wants. If you have the capacity, you should position yourself to present the proposal with the most attractive deadline for him.
6. INCREASE INPUT SIGNAL / VALUE
In case you are unable to increase the overall value of the business, because you are already at the limit of your capacity, another possibility to negotiate the purchase of a house is to increase the entry price (down payment). Sometimes owners have a short-term need that can be overcome with a higher down payment.
From the seller’s perspective, a high signal value means more commitment on your part. So, whenever you can, have no problem in making your proposal count through a more generous signal. In the case of tied proposals, a higher signal is usually a strong point for the tiebreaker.
By my sensitivity, given that the average signal should be around 10% to 15%, if you manage to increase the signal to 20% or 30%, it will certainly capture the attention of the owner.
7. MANAGE CONTINGENCIES
In the purchase proposals, sometimes contingencies are associated, that is, events external to the business that may influence the outcome of the contract. When these contingencies are on the buyer’s side, the seller does not usually welcome them since, in case the contingency is not met, the CPCV can go back with the return of the signal.
Examples of the most frequent contingencies:
- Bank credit approval
- Property valuation
- Need to sell the current (buyer’s) home
- Legalize a specific area of the property (eg a storage room)
- Being able to transfer part of the money from another country (to be able to buy the house)
- Have the situation of the condominium regularized
- Make arrangements in the property
Although you may have some contingencies in your purchasing strategy that you cannot give up, always try to see if there is a way to do business without imposing them.
For example, if you need bank financing, which is often the case, you should first choose to speak to some banks to find out what conditions the market gives you and close a credit pre-approval so that at the time H there is no uncertainty regarding the probability of approval of your credit and so that you do not have to request a 90-day CPCV given this contingency.
This preparation will not only let you know from the beginning of the search for your new home what is the maximum possible purchase price compared to what the bank lends you, as it shows the seller that he is careful.
In addition, if you already have a credit pre-approval, you only need 15 days to handle the property evaluation. And 15 days is already a short enough period for an owner to be more comfortable. If the evaluation goes well, you can complete a deed between 30 to 45 days (instead of 60 to 90), which is great news for both parties.
8. KNOW WHEN TO GIVE UP
In case you have already exhausted all approaches and still have not been able to reach an agreement with the owner, then it is time to finish… Knowing how to abandon a negotiation is an art and avoids making bad decisions about pressure.
Buying a house is not an easy process and it is likely that you will not be able to keep the first home you like, but now, knowing these 8 tips for negotiating the purchase of a home, the next home will be yours!
