Laurin Jeffrey | February 12, 2011
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How first time home buyers can get it right

By Mark Weisleder – Toronto Star MoneyVille

The main error that many first time buyers make is that they buy with their heart and not with their head. Here are 10 helpful negotiating tips to ensure you don’t make the same mistakes.

1. Define what you want

Do a needs analysis for the kind of home you are looking for. Take a look at where you live now, and ask yourself, “what are the three things that I love best about where I live and what are three things that would be on my wish list for a new home?” Then focus primarily on homes that satisfy all or most of the checkmarks on your list.

2. Do a little research

Once you find a home that qualifies, conduct research in advance as to what the real fair market value is of that home. Also check to see how long the home has been on the market. Newly listed properties attract the attention of most buyers, so you will be more successful if the home has been on the market for a longer period of time. But, be aware that the reason the house is still on the market is because either the asking price is too high or there may be physical defects in the home that will be costly to repair.

3. Why is the house for sale?

Find out the reason why the seller is putting their home on the market at this point in time. Leverage matters a great deal in a real estate negotiation. If you find out that the main reason for the sale is that the seller is going through a divorce, job relocation, problems with paying their mortgage, that they have already signed an agreement to buy another home, or simply because there are headlines that the real estate market is due for a correction, this will assist you in your negotiation strategy.

4. Keep a poker face

Do not give away your own motivation in buying. You must make it seem that you are not in a hurry. In addition, do not actively demonstrate how much you “love the house”, either to the seller or the seller’s agent. They will use any of this information against you in the negotiations.

5. Ignore sales pressure

Do not listen to or be swayed by pressure sales tactics and do not use them yourself. When the seller or seller’s agent says something like “we already have three offers on the property so you better bring an offer that has no home inspection condition“, do not get involved.

6. Leave the door open

Avoid using the infamous “take it or leave it approach.” It is much better to say to a seller, “I am sorry that we could not come to a deal. I cannot afford what you think your property is worth.” Doesn’t that sound better than “Are you kidding!! You want that much for this piece of garbage”. The soft approach leaves room for the seller to come back to you with perhaps a further negotiation. It is easier to trap flies with honey, remember.

7. Agree on little things

Find agreement on the little things. If you find that the negotiations have stalled, move some issues aside for the time being and try to find agreement on other matters, such as the closing date, what appliances and fixtures that the seller will leave behind and the amount of the deposit. When you make a suggestion on these points, ask the Seller “Do you agree?” You want them to start saying “yes” to this question. As you start to make headway on these items, you are now moving the seller closer to saying yes on the overall price.

8. Let minor issues go

Do not get hung up over minor issues. The seller insisting on removing the grand chandelier from the front hallway should never be a deal breaker. Keep perspective. Remember your needs analysis and wish list.

9. Listen to the other side

Do not interrupt. When they have finished speaking, use the words “I understand your position.” By not interrupting, you have created an environment of respect. Even if the other side gets angry or frustrated and starts raising their voice, remain calm. You might respond to an angry statement by saying something such as “I am sorry you feel that way.” You have not agreed with them, but you have remained respectful.

10. Get it in writing

Make sure that all agreed upon points are clearly put into writing so that there is no misunderstanding later. This includes every item you expect to receive on the property at closing, whether it is the HVAC system, swimming pool equipment, storage shed and plants. Yes, many sellers feel they have the right to remove these items if they are not listed in the agreement. If the seller says the counters are made of granite, put it into the agreement.

11. Set your maximum price

Understand the maximum price that you can afford on that home. This is a line that you cannot cross, no matter what happens. You must be prepared to walk away. Do not be afraid. There will be another home that will come on the market soon enough.

By following these negotiating principles, you will be better prepared the next time you want to buy a home.

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Contact the Jeffrey Team for more information  -  416-388-1960

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Category: Ajax Real Estate, Buying Real Estate, First Time Buyers, General Real Estate, Pickering Real Estate | Tags: , , , , , , , , , , , , , , , ,
Laurin Jeffrey | February 10, 2011
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Real Estate: 10 things you need to know

It’s true what they. When buying a house, location is everything

By Tony Wong – Toronto Star MoneyVille

Next to public speaking, buying or selling a home is at the top of many people’s fear and loathing list. It’s understandable. A home is the biggest investment you’ll ever make and while exciting, the potential for things to go wrong is pretty big. That adds up to enough stress to keep you awake at night thinking about all the what-ifs. But it doesn’t have to be that way. Here are 10 things to consider when buying a home.

1. The housing market isn’t really a market

At least not in the way you might think. While housing analysts like to compare real estate returns to stock market returns, it is a misleading comparison.

The first big difference is that a stock market is a place where you can by and sell immediately. In the real estate market you can wait months for the home you want to come on the market and just as long to find someone who wants to buy yours. The price you expect may not bear any resemblance to the one you get.

The long run return on stocks is also a lot better. The average stock in the Standard & Poors 500 index, a basket of blue chip U.S. stocks, has returned about 7.5 per cent a year after inflation in each of the last 25 years. The average increase in the value of a Canadian home over the same period petty much tracks the rate of inflation which during the same period was 2.5 per cent.

A home is also more than an investment. It has all kinds of intangible qualities, including a neighbourhood you want to live in, a spot with a particular view or landscape, a type of architecture that you enjoy. So, while it’s tempting to think of your primary home as a profit centre ripe for a flip, that shouldn’t be the main purpose.

Besides, your Microsoft stock can’t keep you warm at night. (Unless you bought it when Bill Gates was still working out of his garage. In which case, you probably have your own heating company.)

2. It’s always a good time to buy

No it isn’t. People who bought at the height of the market in the 1989 real estate bubble, didn’t break even until prices bounced back in 2002. That’s 13 years. And even then they didn’t make their money back. Factoring in inflation, they actually lost money. House prices don’t go up forever. Buy when your circumstances dictate, not because your neighbor the agent says it’s a good time to.

3. Location, Location, Location.

Yah, they’re right. You’ll pay more initially, but investing in a property in the good neighborhood close to transit will pay dividends down the road when it comes time to sell

4. Buy the cheapest house on the street

Some people argue you shouldn’t, because the home will compare poorly to the other homes when you sell.

I say go for it. It may already be discounted because it looks like a shack compared with other properties and provides far more upside if you spruce it up in the future. A rising tide can also help to lift all boats. As the street gentrifies, infill housing will continue to keep property values high. Getting your foot in the right address is half the battle. Hello Park Place!

5. Do I need an agent?

No, you don’t. While a good realtor can be a huge asset, not everyone needs professional advice. If you have time, selling your own home can save you a ton of money on commissions. With the advent of the internet, and the opening up of the Multiple Listing Service there are many more services for the do it yourselfer to choose from.

6. If you want an agent…

If you don’t have the time, or would rather use professional advice, a good realtor can be a boon, because they know the neighborhood and can potentially get you top dollar. But like any other service, the results will vary. So make sure you interview several before choosing.

7. Renovating will give me huge return

Stop watching all those television shows where some fancy designer redos the entire house in a week with faucets that cost more than your BMW. Okay, I like them too, but that doesn’t mean you have to gut your kitchen to sell your home.

Most experts say you’ll get the best bang for your buck by redoing the kitchen and washrooms. But even for the most sought after features by homebuyers, the return on investment is anywhere from 75 per cent to at best 100 per cent. That means in many cases if you spend $10,000 you’ll only add that much vale at best and maybe far less.

8. It just needs a coat of paint

When it comes times to sell, you may have been living in your home for so long that you don’t notice the coffee stains on the couch and the Sponge Bob wallpaper in the washroom. Get a second pair of eyes to have a look around. This could be friend, relative or your agent and hopefully they’ll tell it like it is.

You may want professional help in the form of a home stager who can arrange your furniture and make your place look showroom ready. But you don’t need to pay big bucks. Start by asking a friend. She’ll tell you why Sponge Bob must go.

9. Don’t try to time the market

I know people who sold their home at the peak of the market, and rented a condo while riding out the crash.

After the crash, they repurchased near the same neighborhood for substantially less. This is the dream of every home investor. I also have friends who thought the market was going to crash, so they waited for four years to buy a home. Prices kept going up and they finally threw in the towel and bought at a higher price than they expected. Then the market crashed. Housing is a long term investment, and sometimes you just have to commit.

10. Keep your perspective

My friends think think their 1,500 square foot semi is worth a bundle, because they spent hours building the deck and hand painting the cute gold cherubs on the walls.

Being emotionally attached to your home means that when it comes time to sell, your objectivity is compromised. In a down market, with more competing listings, your home is going to be difficult to sell and the price less than you expect. Can you accept that?

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Contact the Jeffrey Team for more information  -  416-388-1960

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Category: Ajax Real Estate, Buying Real Estate, First Time Buyers, General Real Estate, Pickering Real Estate, Real Estate Investment, Selling Real Estate | Tags: , , , , , , , , ,
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