What’s happening out there? I often get asked this question when people realize I’m a local real estate agent in Kitchener-Waterloo. It’s usually followed up with stories about friends and family who either successfully sold their home and are overjoyed with the 5-10 offers they received well above asking price or…. it’s a story of a disheartened first-time buyer who worries they are being priced out of the market all while having money to make a down-payment, ready and willing to buy. Buyers just can’t seem to get a deal together and are losing in multiple offer negotiations.
Five Principles When Purchasing In A Heated Market
Or How to Win Multiple Offer Negotiations:
#1) Use a highly qualified Realtor: Your representative should have a track record in the current market conditions. This individual should update you regularly on what homes sell for in neighbourhoods of interest. They should be tracking the average increase on sale price vs. list price. They should be educating you as a Buyer on the market conditions so that when the critical moments of negotiations occur you’re ready to be aggressive. As a rule of thumb, a qualified Realtor completes 20+ sales a year; this means they will have extensive trade relationships with other realtors which can benefit you as a Buyer.
#2) Work with an excellent financial team: Should you require financing, be very clear on the terms and qualifications. Many Sellers are holding offers until a specific day to receive offers; this should allow you enough time to submit the listing to your mortgage consultant in order to receive a firm commitment on the property. The vast majority of residential property currently sells without any conditions from the Buyer. A firm mortgage commitment should allow you to place an offer without a financing condition. Benjamins Realty can refer you to industry leading mortgage consultants who will provide this service.
#3) Be available during negotiations: Your Realtor should either be presenting your offer in person or be available during the offer presentation in order to deal with any questions that may arise. As Buyers you must also be available. The Sellers may end up deciding between two similar offers allowing a chance to increase or change your offer, it could be something as simple as a closing date. The Buyers who display the most responsiveness and flexibility to the Sellers needs, also end up in the strongest positions.
#4) Be aggressive: When you find a home that you’re excited about, be ready to capitalize. The day of negotiations a game-plan should be formed with your Realtor discussing multiple scenarios based on the level of competition you could come against. As a Buyer, understand that list price typically does not represent a realistic representation of the property’s value. First, determine fair market value with your Realtor, then contrast that against the competition, and finally, balance your desire to secure the property while not paying too far over market value (understanding new value benchmarks are being set all the time).
#5) Sometimes it’s ok to lose: In a volatile market, home value benchmarks are being established at a higher price point almost every month. Even with a good game-plan another Buyer (who has likely lost too many times in negotiations) may choose to pay what is normally considered far above fair market value in order to lock down a property. A common phrase around our brokerage is “there is no shortage of opportunities,” you will likely find a better property.
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