You and your realtor have toured several properties, and you’ve found the one. In fact, in your mind, you’ve all but moved in. The only glitch is, it’s not yours…yet. In a real estate market as competitive as the Lower Mainland’s, you need to do your homework, know what you want, and be open to negotiation when home buying.
Making an offer
Every property has a list price, which is the price at which the seller is offering it up for sale. The list price doesn’t necessarily equate current market value. Sometimes, the seller will list the property at current market value. Sometimes, the list price is much lower than current market value because the seller hopes to spur multiple offers. And at other times, the list price is well above current market value because the seller hopes someone will pay this higher price. This is where doing your homework, with your realtor’s help, comes in. Your realtor can do an analysis of recent comparable sales to determine if the list price reflects current market value. Once you have this information, you have what you need to make a fair offer.
Money isn’t the only thing that you’ll be offering. The dates on which you wish to complete and possess are often very important, and can even sometimes persuade the seller to take a lower offer because the timing works out better.
Other things, like your subjects or conditions, can be a big part of your offer. Offers that have fewer or no subjects are often more attractive to a seller than those that have several subjects. It is very important to remember that, if you are going to waive the usual ‘subject to financing’ condition, you must have a conversation with your lender to ensure financing will not be an issue before you make the offer. The last thing you want is to have your subject-free offer accepted, only to realize that your lender won’t give you the amount of money you need. Please note that your mortgage preapproval (which you get before you start looking at homes) is not the same as talking to your lender about going subject-free on a specific property. If you want to go subject free, you must talk to your lender again to ensure financing will not be a problem.
Negotiating with the seller
With your direction and on your behalf, your realtor will negotiate with the seller’s agent. Negotiating can seem adversarial. It isn’t. Think about the negotiation as you wanting to work in cooperation with the seller (through his/her agent) to make a transaction. Know what you are willing to negotiate on (price, dates, subjects) and what your walk-away price is when home buying. Your walk-away price is the dollar amount at which you are willing to lose the property. Concede on one item at a time, and if you give in on something, ask for something in return. Your realtor will help you get through a negotiation and hopefully come to a happy resolution.
Doing your due diligence
Doing your due diligence is very important, whether it’s before you make an offer (so that you can make a subject-free offer) or after your conditional offer has been accepted. If you’re buying a condo, your due diligence will include reviewing all the documents (strata minutes, depreciation report if any, engineer’s reports, bylaws, title document and property disclosure statement) for the building. These documents will give you a good idea of the condition of the building and how proactive the strata council when concerns arise. An inspection may also be a part of your ensuring that the property you’re buying is satisfactory condition. Your due diligence may also include finalizing financing with your lender. Typically, if you’re doing your due diligence after your conditional offer has been accepted, you will have from 7 – 10 days during which to ensure you are satisfied with the property and your financing is in order. At the end of this period, you would normally remit your deposit via bank draft to your realtor, per the contract of purchase and sale.
Completing the deal and getting possession
This is the final step to owning your home. When subjects (if any) have been removed and the deposit has been remitted, you’ll need to make an appointment with a lawyer or notary to transfer title and handle any disbursements. Your realtor’s brokerage will send over all the paperwork to your lawyer/notary of choice, and your lawyer/notary will work with the bank to get the information he/she needs to organize disbursements. Typically, you would meet with your lawyer/notary about three weeks prior to completion.
You’ll also need to arrange utilities (BC Hydro, telephone, etc.) during this time. Additionally, ensure that you have purchased insurance for your new property. You are responsible for your property as of completion date. If you are purchasing a condo, ensure that your insurance covers the deductibles as noted on the insurance for the strata. Your realtor can help you find this information.
When possession day comes, you’ll get the keys from your realtor and walk through the property to ensure it is in reasonably the same condition as when you viewed it per your contract of purchase and sale.
Now it’s time to move in and enjoy your new home!
This article is part two of a two-part series, written by Emma Berg, Realtor, Oakwyn Realty. Part one of this series can be found here: Home Buying – 3 Things You Should Know Before You Start Shopping.
Emma Berg is a realtor with Oakwyn Realty. She and her realtor husband Barry Berg work together to help people who love Vancouver, live in Vancouver. Contact Emma at email@example.com or 778.988.9102 anytime. www.teamberg.ca
*All images in this post are courtesy of www.shutterstock.com