To determine your initial price
for the property work with your real estate agent to understand
the fair market value of the property. To establish a fair offer
price use the factors outlined in this article to help calculate
any increase or decrease in value.
Be sure to keep your fair price
determination to yourself. If your Toronto real estate agent is
a dual-agent or subagent they are obligated to tell all parties
if they know. If however they are a buyer agent then that
information is safe to share with your Toronto real estate
agent.
#1 Understanding the Market -
Looking at similar and recent sales in the area is key. Feel
free to look at past sales but keep in mind how much the market
has fluctuated since then. Look at similar markets too. If there
have not been any recent sales in your neighborhood venture over
to a comparative one nearby.
#2 How is the Current Market? -
In a slow buyers market the vendor will be more giving during
negotiations. Contrastingly in a hot sellers market your offer
needs to be generous to even be considered.
Toronto, however, is generally
a balanced market where there is not a set advantage to bidding
either your minimum or maximum up front. It can be difficult to
decide on your negotiation strategy in a balanced market, one
approach is to allow other offering price factors help you
choose.
Although it is very difficult
for anyone to accurately predict market changes, asking your
Toronto real estate agent for their thoughts can help you
determine if the market is in transition. Even during lengthy
periods of balanced market spontaneous activity can occur
causing times of instability or inactivity.
#3 How Long has it Been Listed?
- Generally the longer a property has been on the market, the
more willing to negotiate the vendor becomes. Use this factor to
your advantage during the negotiation.
#4 Why is it For Sale? - Price
is not affected by the vendors motivation to sell. Willingness
to negotiate however is greatly affected. If an owner needs to
sell your chances at price negotiation are greater.
By the same token, if an owner
does not really need to sell then your chances of negotiation
are minimal. Then the motivation for selling is strictly profit
you will find you need to pay a significant premium to obtain
the property.
#5 How Much Did it Cost the
Owner? - Although the price the current owner purchased the
house at does not affect the current market value it may affect
your offering price. But do not become fixated on what the
vendor paid for the property.
#6 Any Home Improvement Costs
to Consider? - Money spent on major improvements to the house
need to be considered. Your Toronto real estate agent can help
you account for things like new flooring, extra rooms, renovated
kitchen, etc.
#7 Will Money Need to be Spent
to Improve Property Conditions? - Evaluate the property
condition. Your offering price should be affected by money that
you will need to put in to make any improvements. To help assess
the situation a home inspection should be done before you make
your offer.
#8 Costing Out Conditions - You
will need to use a premium dollar to attract that vendor if your
offer is conditional upon any contingencies. Some conditions
will cost you more than others. Speak to your real estate agent
to understand the price implications of your desired conditions.
#9 Multiple Offer Bidding War,
What To Do - In general the price you are willing to pay should
not be affected by a bidding war, only your pricing strategy.
Your best bet is to figure out your maximum offer price and
stick to it, you need to be prepared to walk away.
