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3 Tips For Crafting a Perfect Offer to Purchase

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After months of sifting through listing after listing, none that have aligned perfectly with your criteria, you’ve finally found the house of your dreams! It’s in a great neighbourhood, falls within your budget, and even has the back garden you’ve always wanted, But before you can call everyone you know and celebrate, there’s an offer to be made and accepted, as well as a potential negotiation process to navigate. Here are 3 tips that will help you make an offer competitively, and hopefully lock in your dream home before anyone else does:

1. Base your approach on real numbers

A property’s asking price is  not just a place to begin negotiations. Your first offer should always be based on, and justified by, a comparative market analysis (CMA). Begin by consulting with your real estate broker about similar homes and recent sales in the neighbourhood. Ideally, your CMA should be based on homes sold within the past 3 months, though you might need to go back a year in slow-paced residential districts. Find an average asking price for properties with a similar square footage and number of rooms. Then, adjust the offer according to individual characteristics of the property, such as garage spaces, floor height, balconies, and amenities.

If you’re thinking of submitting a lowball offer, engage in a candid conversation with your real estate agent. Your agent may be able to consult with the listing broker in order to find out whether an offer significantly below asking price will initiate a negotiation, or whether it’ll receive a flat-out “no.” In hot markets, a lowball offer could derail your chances of landing your dream home.

If you know the competition is tight, think about including a personal note for the seller. Aside from the required paperwork (including your mortgage pre-approval!), and your broker’s presentation justifying the offer value, a message about your motivations to buy could just strike a personal chord and win you the home.

 

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2. Don’t let your emotions get in the way of a good investment

Before jumping into negotiations, be sure to think carefully about your budget and maximum price. When the perfect home comes along, it’s easy to let your emotions override your good financial sense. Take into consideration your pre-approval value, hidden costs as well as your carrying costs. Remember that your monthly housing costs, including your mortgage, taxes and bills, shouldn’t go over a third of your monthly income. In some cases it’s simply better to back out of a bidding war and wait for a home that’s reasonably within your budget.

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3. Carefully consider the terms and conditions of your offer

If you’re purchasing an older home, chances are you’ll want to include seller concessions in your offer. Asking for repair work to be done is a normal part of the offer process. At the same time, if you’re bidding in a competitive market, asking for too much could cost you the home.  Discuss with your broker to find out how much is reasonable and how much is worth putting off until the inspection.

Find out from the listing broker how flexible the sellers are on move in dates, and find a compromise with your own needs to settle on a reasonable closing time that would convenience both parties.

 

 

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