| Buying

There’s always been a power struggle between buyers who want a low price and sellers who want the highest price possible. However, we know that price is not the only strategy. Sometimes it’s the conditions that make the difference between rejection and a winning offer.

Our Toronto home buyer’s guide shares our top tips to help you formulate an irresistible purchase agreement that sellers can’t refuse.

What Exactly is a Purchase Agreement Condition?

Purchase agreements are legally binding documents submitted to sellers when buyers make an offer on a property. They provide an outline of the price and conditions you’re suggesting, including:

  • Closing date when ownership is transferred
  • Home Inspection to look for defects
  • “Chattels” not included with the property, such as appliances, certain fixtures like a nice chandelier, or even cheeky requests like furniture
  • Financing for your mortgage
  • Status certificates (for condos)

Rejection or Acceptance

In most cases, the initial offer results in a counteroffer from the seller until an agreement is reached or the offer is rejected. Less common is an offer getting accepted or rejected right out. Immediate acceptance only happens with stellar offers, while insulting offers are sure to deliver a resounding “NO.” And therein lies the problem.

Here’s how our savvy real estate team uses conditions to compose a stellar offer.

Strategy #1: Know the Market

We always factor in current market conditions to determine fair market value for a property. This number is based on the current average price paid for the home type and location. While there are sometimes extenuating circumstances that can impact our strategy, our winning offers are typically based on the following:

Buyers’ Market

Fewer buyers and higher listings create a buyers’ market. High inventory puts downward pressure on prices, loading the odds in the buyer’s favour. That means we can confidently go in with a lower price and more favourable buyer’s terms. High inventory means you can usually get away with reductions ranging from 2% to 10% and push the limits of your terms (Think that cheeky request for a chandelier that piques your fancy).

Balanced Market

A balanced market means there are no clear winners or losers, making it less stressful to buy or sell a home. It’s also the only market where the majority of homes are sold for their true value, meaning buyers don’t lose out by paying above the actual price. At the same time, although sellers might not make a “killing,” they will get the full value of their homes. It’s the proverbial win/win, which leaves the door open to negotiate a little more on conditions such as asking for the shiny new appliances.

Sellers’ Market

That brings us to the least desirable market for the buyer: the sellers’ market. When inventory is low and the market is swarming with eager buyers, sellers expect higher offers that are free of unfavourable terms. With fewer homes out there, buyers become highly competitive, leading to the dreaded bidding war. In this scenario, we have to be hyper-aware of the seller’s expectations and aim to stand out with an above-asking price and reduced terms and conditions to make the seller’s life easier. Conditions can be a lot more painful and require some true sacrifices, with the worst-case scenario including waiving the inspection.

Learn more about the art of buying a home in Toronto in any type of real estate market with these posts next:

Strategy #2: Offer the Right Price to Balance Conditions

If we’re being honest (and we always are!) sellers will balk when they see two things on your offer:

  1. A low price, and
  2. Conditions that cost them money or cause them stress.

We need to set prices just above what the seller considers insulting in a buyer’s or balanced market or what the competition is likely to offer in a seller’s market. This approach provides some negotiating power to reach the price you’re actually willing to pay. Then by waiving certain terms, such as agreeing to the seller’s closing date, we can help tip the scales in your favour.

Your home-buying strategy, and therefore, offer strategy can also change depending on outside economic factors. Learn more by reading: Benefits of Buying a Home During a Recession.

Strategy #3: Presentation

We win sellers over by using facts and figures to justify our price and conditions. For example, we include recent “comps” to support our price and cite the age of the house as a reason we won’t waive the inspection. Facts help eliminate emotions that can lead to rejections. When we artfully balance price and just enough compromise on conditions, we can stand out in a good way and seal the deal.

The Bottom Line

We know when it’s safe to offer a lower price with terms in your favour and when the only winning strategy is to go in high and waive some conditions. It takes an experienced real estate team to carve out a purchase agreement that balances a strong, fair price and stress-free terms for the seller without compromising your budget and needs.

If you’re thinking about buying a home now or in the near future, make sure you have Toronto’s best real estate team on your side. Get in touch with The Christine Cowern Team today by calling us or emailing us directly.