March 02, 2021 | Geoff Geddes
Give and take: how to navigate price negotiations during a home purchase
Finding the right home might still be about location, but when it comes to getting the best deal, the key is negotiation."To secure a property at the right price, start with a proper analysis," said Viki Fairbairn, a REALTOR® and agent with Royal LePage Benchmark in Calgary. "Once you determine the proper price range, you can see if it fits with your comfort level. Ideally, the seller's lowest price and the buyer's highest price should overlap."
Though some Realtors warn against lowballing with the initial offer, Fairbairn sees things differently.
"I don't think any offer is too low, within reason. The right initial offer depends on the market, the buyer and your analysis," she said. "If the buyer and seller have both been properly educated by their agents, there should be no risk of offending with that first offer."
Once you've settled on your offer, it must be sent in writing to the seller, who has the option to accept, reject or counter.
"I don't think any offer is too low, within reason. The right initial offer depends on the market, the buyer and your analysis." - Viki Fairbairn, Royal LePage Benchmark
"If the seller counters, you need to look at everything involved in the offer, including price, possession date, deposit, conditions and terms," said Fairbairn. "Then you can negotiate on any or all of those items, usually with a verbal back-and-forth between the agents. Once everything is agreed upon, both parties initial a conditional offer, which then becomes a firm offer once any conditions are waived."
In terms of purchase price, Fairbairn says the biggest mistake first-time buyers make is buying more house than they can afford.
"You need to consider your total debt service and try to anticipate future expenses," she said. "What if your car breaks down in three years and can't be fixed, but you bought such an expensive house that you're unable to get a car loan?"
The other common misstep is letting emotions cloud judgment.
"Make sure you have your list of what's important to you, so you don't get caught up in the moment with a beautifully staged home," said Fairbairn.
"I had a buyer who hosted card nights every two weeks and needed space for his table. When he was attracted to a particular property, I asked him where he could put his card table, and it turned out there wasn't a good spot for it. If we hadn't talked about that, he would have been unhappy down the road, so you must understand your needs and wants and keep focused on them."
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