Here’s a market update from our friends at Macdonald Realty; Simon Clayton, Kristie Marsden, Jason Low, Sandra Ens, Jason Feinstadt and Jenny Stephanson.
Last month we focused on Sellers and how to price homes for sale. This month, we’ll be turning our attention to Buyers and offer certain strategies for how you should approach the negotiation process. Remember, these are just general guidelines. Every situation is unique and you should consult your Realtor about your specific circumstances.
1)
Make Offers on Reasonably Priced Properties
Pricing is an art that some Realtors understand better than others. A reasonably-priced property will maximize your chance of success of buying at a fair price.
Properties that are priced too high likely have unreasonable and/or unmotivated sellers. These properties will likely sit on the market for a good period of time before the seller’s expectations lower or their motivations increase. In the interim, it is unlikely that you will convince the seller to accept a market-priced offer.
Properties that are priced too low will likely solicit multiple offers: an unpleasant situation for most buyers. A general rule-of-thumb is that 2 offers will solicit full price, 3 offers will achieve a 5% premium, while 4 or more will see 10%+.
2)
Don’t Low-Ball
As a Buyer, your realistic goal should be to get the property you want at market price. Unless you are fortunate enough to encounter exceptional circumstances, low-balling decreases your chances of achieving this goal.
You will routinely see Sellers being ‘insulted’ with a low offer and simply not provide a counter, either out of spite or out of a belief that a deal is unreachable. In this scenario, if you really like the property, your only response would be to tender a completely new offer. In this case, you’ve tipped your hand that you really like the property, and your negotiating position has been compromised.
Conversely, very low offers are often countered with very little movement on the Seller’s side. Like in the first case, your only move at that point is to move even further on your next counter. Once again, you’ve compromised your negotiating position while also making the Seller an adversary rather than a partner.
3)
Pay to the Point of Indifference
If you do happen to get into a multiple offer situation, your bargaining position is limited to your best offer. In this case, your Realtor should provide a basic CMA for you to make an informed decision and you should come in with your best offer.
Your offer should be at the point of indifference, which means that if the final purchase price is $100 higher than your offer you will not feel discouraged.
Many factors come into play when it comes to pricing your home and a professional can help you through that process. To find out more, please feel free to contact one of us at the address below.
July 2009 Market Update
If you would like to learn more, please feel free to contact us by phone or by clicking on one of the links below:
Simon Clayton 604-764-0711
Kristie Marsden 778-836-4389
Jason Low 604-790-5276
Sandra Ens 604-263-1911
Jenny Stephanson 604-675-6214
Jason Feinstadt 604-263-1911
MacDonald Realty 604-263-1911
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