The current real estate market is on fire so if you’re thinking of putting your property up for sale, there’s no better time than now.
However, if you’re looking to buy, current real estate conditions can feel like a minefield — especially for first time buyers. In this post, you’ll learn some common real estate terms to help you evaluate listings and see the questions buyers ask most often when trying to purchase real estate in a fast-moving market.
1. Are Low-Ball Offers Advisable?
When considering a low ball offer that’s below the asking price, you run the risk of souring a prospective sale. They are commonly rejected unless the property is overpriced to begin with, therefore before making your offer, it is advised to research some influencing factors which might sway the seller’s decision.
- The seller’s motivation behind selling.
- Understand the neighbourhood by looking at comparable prices – is the property overpriced or fair?
- Are there any contingencies attached to the offer – e.g. does the seller have another house under contract?
The more you analyze your seller’s motives, the neighbourhood and offer contingencies, the better prepared you are to make an educated offer based on facts and research. This will improve your chances of success.
2. What is a Condominium?
A condominium is a form of real estate property ownership which comes in two parts. The first is owning your own unit along with the full title deeds. The second is having joint ownership of the ‘common elements’ within the complex.
These are often shared with other property owners and include common areas like parking space, pool, clubhouse, sidewalks, etc. You should expect to pay a monthly fee for the shared amenities and property upkeep.
3. What Should We Offer?
There are many factors that can influence an offer, so it is of utmost importance you are fully informed and aware of all of the information and circumstances in play.
Factors to consider are:
- What are the seller’s motivations? Why are they selling?
- What is the value of other neighbourhood properties?
- Are there any contingencies attached to the offer?
- Are there any rival offers on the table?
- Do you need to repair or renovate the property?
- How will you buy the property — an all cash transaction or (more likely) with a mortgage?
- How long has the property been on the market?
- Has the property price been reduced?
While it can be tempting to make a low offer, only with thorough research can you make an informed decision that might sway the seller. If you are unsure on where to start researching, Bill can help you formulate a bid that increases your chances of being the winning bidder, without overpaying.
4. What are Some Tips on Negotiating?
The more you know about your seller, the stronger your position will be when negotiating.
Also, remember that the seller’s asking price is their desired figure. It isn’t necessarily the valued/assessed price and more often than not, sellers are willing to settle for less as they have overvalued the property. Check the neighbourhood for comparable prices to see if the property may be overvalued for the area, giving you a bit of leverage.
But keep in mind, if your seller has an experienced and savvy realtor, they may use an aggressive tactic of ‘sticking to the price’ and negotiate hard for the seller. In a hot market, you might also be up against multiple bids and even see homes selling for more than the asking price.
Be prepared for all eventualities and look to your experienced realtor for support in making each next step.
5. What Contingencies Should be Put in an Offer?
It is common practise to sign a purchase contract that clearly states the terms and conditions for both the buyer and seller. It is here you also include the offer contingencies, otherwise you could forfeit your deposit.
There are two main contingencies you need to know. The first is a Financing Contingency, which states that the property sale is dependent on the buyer’s ability to obtain a loan from the lender (usually through a bank or private mortgage).
The second is an Inspection Contingency, which allows potential buyers to hire professionals who inspect the property. It is good practise to have a property surveyor to inspect a property before any money is exchanged, thus giving the buyer peace of mind knowing there will not be any hidden complications with the property.
It would also be prudent to include the seller’s responsibilities in the purchase contract, such as:
- Passing a clear title.
- Maintaining the present day condition of the property until closing.
- Completing any agreed upon repairs.
6. Can You Buy Homes Below Market Value?
Buying a home below market value is an attractive prospect, yet there are some considerations that need to be taken into account. Why might a house sell for below market value and where can you find these properties?
Here is a list of the different bargain properties to look out for in the real estate market:
- A foreclosure property – meaning the property has been reclaimed by the lender, (usually a bank). The price is low because the lender can only make a profit once the sale is complete. However, make sure you research the property thoroughly, to identify any potential problems or the cost of repairs needed for the property.
- A fixer-upper in an up and coming neighbourhood with the aim of improving the property to either rent out or to resell for a profit.
- Derelict properties that are due to be torn down.
- A leftover house in a new housing development
- An originally overpriced house that’s been substantially reduced.
Bargain properties are out there waiting to be found, so make sure you shop around to find your bargain. It is also advisable to view a few properties, so you can compare and contrast and find the most suitable property that fits your needs.
7. Whose Obligation is it to Disclose Pertinent Information About a Property?
It is the seller’s responsibility to disclose information about the property. However, the obligations to disclose varies depending on location and local building laws.
Under the strictest of laws, sellers are required to disclose all facts that materially affect the value or desirability of the property. These might include:
- Disclosure on the current occupants
- Who should sign the contract
- Any and all official letters received
- Planning matters within the neighbourhood
- Any problems with the property
Failure to disclose this information can result in a lawsuit for the recovery of damages on the grounds of fraud or deceit. So it is a good idea to make a note of some important questions to ask the seller when viewing a property. If in doubt, you can always speak to one of our agents for advice.
8. What Happens Once We Sign an Offer?
When you negotiate a real estate transaction, there are simply too many points to include in the purchasing contract, therefore purchasing contracts generally only include the most relevant points, like the standard financing and home inspection contingencies.
When drafting the purchasing contract be sure to include any important amendments or additions you want stated, and always make sure these amendments are in writing rather than settled as an oral agreement, which is neither binding nor guaranteed.
9. How Can I be the Winner in a Multiple-Offer Competition?
There will undoubtedly be others vying for the same property. The most qualified buyer is usually the buyer who can offer the best price with the least amount of strings attached — and that means fewer contingencies. If you can satisfy the seller’s conditions before making the offer, like already having a mortgage pre-approval from the bank, that will put you forward as a strong contender.
It can also be worthwhile to emotionally appeal to the seller. After all, if you and the competitor submit similar offers, the choice will boil down to who the seller prefers. So it doesn’t hurt to build some rapport with the seller.
At the end of the day, there are many factors that can influence a sale. But a good place to start is to conduct your research thoroughly and to make sure all your paperwork is in order. The rest will follow suit.