For the last few years, Toronto’s real estate market has been on a seemingly never-ending upwards trajectory. With Sellers controlling the market, Buyers did whatever Sellers wanted, and real estate agents simply did what they were told to do. They became order takers. In fact, it spawned a new term that I wish I’d come up with: the McRealtor. Would you like fries with that?
As I blogged about earlier this week, negotiation isn’t really part of the curriculum to get your real estate license in Ontario. But as the Toronto real estate market becomes more balanced (in other words, the supply of properties for sale is equal to the number of buyers looking to buy them), the art of negotiation is becoming more critical. Sellers can no longer count on getting a bidding war, and they can no longer dictate the terms of the agreement.
If you’re a Buyer in Toronto’s new real estate market, here’s what you need to know about negotiation:
Price – The old McRealtor standard of ‘give the Seller what they want’ is so 2011. These days, it’s not uncommon for negotiations to go back and forth numerous times and to span a number of days (vs mere minutes last spring). More and more, we’re finding that playing hardball when representing Buyers is working. It’s paid off for our clients to the tune of tens of thousands of dollars. Sweet.
Days on the Market – The longer a property is on the market, the more ability you have to negotiate the price down [Note to Sellers: getting greedy when you first list your property may cost you more money in the long run].
Closing Date – Closing date is important to Sellers who are moving to another home and it’s important to investors who have a vacant property and are losing money every month. If something is important to a Seller, it might save you money. We’ve successfully negotiated thousands of dollars off an asking price because our Buyers were able to be flexible on closing date.
Conditions – We were never fans of the crazed bidding war environment where eager Buyers put offers on houses without conditions, giving up the right to something as important as a home inspection. In a more balanced market, Buyers are able to negotiate better and longer conditions. Home inspections are once again the norm. While we may have negotiated two day financing conditions last year, we’re now able to negotiate up to 5 days for our Buyers to get their finances in order (which makes everything less stressful for everyone).
Stuff – Depending on the Seller and their motivations, it might be easier to negotiate “stuff” into the price – the barbecue on the balcony, fixing the leaky faucet, etc. A good real estate agent can help you decide whether or not this is to your advantage. (And no, Sellers are still not likely to give you all their furniture.)
But alas, some things never change:
Deposit – a healthy deposit continues to show the Seller that you’re serious (and that you have some skin in the game).
Speed to offer – Sure, properties are staying on the market longer these days, but that might mean 13 days instead of 6. Once you’ve found the home of your dreams, it’s always best to make a move. It’s never fun to hear that the house you’ve been ‘thinking about” just sold.
Strategy – Negotiation has been and will always be about strategy. You can read all about that in my previous post: Negotiation Strategy for Real Estate.
Above all else, if you’re in the market to buy a home, make sure you’re represented by someone who knows how to negotiate.