You may want to read the previous chapter on touring open houses in Toronto here.
Comparative Market Analysis
After you have carefully selected and examined your new home, it’s time to make the first proposal to the seller and see where it goes from there. But before you can make a sensible purchase proposal, you must know how much the home is worth. To know what price is reasonable, ask your agent to prepare a Comparative Market Analysis. This is a report that contains many market indicators and trends to help you arrive at a price, including such data as whether homes in the area are selling for above or below the asking price (the list-price-to-sale-price ratio). This ratio will help you establish your chances at negotiating a better-than-asking price.
make me rich by Terence S Jones
Once you have your Comparative Market Analysis, crunch the numbers (or have your Realtor® do it!) to figure out the home’s likely market value. This will help you determine what to offer as a purchase price. Is the home’s list price equal to how much it really should be selling for? How much is the most you should consider paying for it? You can pay for a professional home inspection (typically about $400) if you have concerns about the home’s ‘envelope’ and major systems. Such an inspection will provide an estimate of what it would cost to modernize the home and perform any necessary repairs and replacements.
Don’t forget to ask the seller whether they have possibly already paid for such inspection – he or she should be able to give you a copy of the results if that is indeed the case.
Knowing the Seller’s Situation
Is the home’s list price roughly equal to the market valuation? As we’ve explained before, it is important to ask for the reason the house is being sold. Not only the reason, but also its imminence will tip you off whether you can press the price down or not. If you found that the seller is in a rush to sell, you have an advantage. If you find, however, that there have been other offers, albeit tentative, you must be more careful.
You might even go to the lengths of finding how much the home cost the seller before and how much is left on the existing mortgage. If the seller is moving for a job, or just plain eager to let go of the house, they may be willing to accept a more modest offer – especially if you are ready to act quickly. If there is more supply than demand (a buyer’s market), consider making a lower offer too.
Stigmatized houses, as you know, tend to linger on the market longer than usual and so you might be able to snatch a good deal if you agree to buy quickly.
If the house is one-of-a-kind or very difficult to price, consider paying for a professional appraisal, which may also be necessary to back the purchase contract. Whereas an appraisal might be helpful, it usually takes some time to make, so be sure that you are serious about purchasing this particular home and make sure the seller knows to wait.
Pressing the Price Down
To be fair, you can actively contribute to the likelihood that the seller will accept a price lower than the one he or she listed. To entice the seller into accepting your offer, make it more attractive than he or she expects to get. Suggesting quick closing, dealing in cash, or agreeing to buy the home in its current state (as opposed to requiring the seller to make last-minute repairs) might all be very good arguments in your favour in the seller’s eyes.
If you find this guide helpful and want to read about more tips, sign up and get the Pdf printable version of our Free Report on Buying and Selling Your First Home in Toronto!