Toronto’s real estate market comprises many sub or local markets, divided into condos and houses. There is a lot of complexity when evaluating a home you would like to buy. Let alone how to make a winning offer. Certain principles go a long way toward success. It’s not exactly a science or an art, but seemingly a blend of the two. These critical steps can undoubtedly increase your chances of winning the home that you love.
Asking Price vs. Purchase Price
The asking price of a home in Toronto can be misleading. Depending on where the market is on any given day of the week, there can be a substantial discrepancy between the asking price (which we like to highlight as a marketing strategy with our clients) and the home’s true value. It’s essential to have proper guidance to separate the two, manage expectations, and set forth an effective buying strategy to avoid paying more than market value for the home. An agent must be able to communicate the value using comparable sales and recent experiences (anecdotal evidence), and help the buyer determine their bottom-line price. Don’t get sucked into believing that the asking price has anything to do with actual value – you need a trusted Realtor to guide you.
Deposit
A deposit is either made herewith or delivered within a specified period (as set out in the agreement of purchase and sale). Note that herewith is far better in appearance for both the home listing agent and the seller(s). Also, the larger the deposit, the more attractive it can be to the seller – in some cases, our clients have won the home in competition based on the deposit amount.
Conditions
Conditions can be deal killers. Not always; this is very much decided on a case-by-case basis, and the negative consequences must be fully detailed to the buyer. There are certain circumstances when conditions can be leveraged, while other situations will ensure the deal doesn’t work out in a buyer’s favour. We carefully guide our clients to ensure they understand the differences based on the property, the competitive landscape, and the due diligence conducted before an offer is made.
➤ Every good investment needs a well-planned strategy. Start preparing with the following:
- Are Condos A Good Investment?
- The Most Undervalued Condos In Toronto
- Condo vs House Investment
- Why Parents Should Invest In Toronto Condos For Their Children
- Millennial Home Buying Trends
Closing Date
The closing date for a home can make or break a deal as well. Perhaps the seller is closing on another home, or they want extra time to find their next home. The key is communication between parties (via the real estate agents) As a buyer, you will need to decide on the best course of action. If the buyer is a renter, how much time are they to give their landlord? If they have their own property to sell, how much time do they need? All of these factors add up. Closing dates can be a part of the negotiation and should not be taken lightly. After all, there is a value to specific dates. Knowing the value and any associated costs will factor into the outcome of an offer to purchase.
Chattels & Fixtures
We are often asked about the difference between chattels and fixtures. Suppose you could imagine picking up a house and shaking it. The items that do not fall out are fixtures of the house. Chattels are the items that fall and get tossed around in this example. Furnace and hanging lights are fixtures. Carpets are chattels. Including and excluding some of these items can be a point of contention between buyers and sellers. Suppose the seller has a family heirloom dining room light that is affixed to the ceiling. The seller may wish to exclude this fixture from the purchase and sale agreement. What’s it worth to the buyer versus the seller? These elements factor in. Also, are the chattels and fixtures in working order, with no warranty or “as-is-where-is” condition? Altering the seller’s desired protocol can affect the deal, but failing to protect the buyer can create significant risk. Knowing when to accept or negotiate is the difference between success and failure in buying a dream home.
Clauses
Some clauses are mundane and state the process. Other clauses can be a deal killer. We recently had a listing at Yonge & Eglinton. Multiple buyers made an offer. The offers were nearly identical. However, one agent stipulated that the seller would make some improvements to the condo before closing. This was not a condition but a clause that stated it would be done. The seller didn’t have the time to manage the projects, let alone the fact that additional costs would be associated with the work. The other offer, though nearly identical in all elements from price to deposit, etc., did not have this clause. The buyer was perfectly comfortable with the condition of the space. The seller went with the less-hassle offer, the one without the clause stating that work be done on the space before closing. Knowing when and what clauses to use is integral to success.
Intrinsic Elements
Whether someone wants to accept or believe this or not, residential real estate comes down to lifestyle and the soft and fuzzies. Yes, we said that. Condos and homes are sold for many reasons, including family and lifestyle. There are dreams made in homes and dreams made of the next house. Residential real estate sales are not Commerical real estate. Commercial real estate is most often completed between corporations, where it simply comes down to dollars and cents and whether the cost of creating and managing the space aligns with the future business model.
Sometimes, a letter or an insightful story to the sellers can help the buyer’s chances of winning the home. Not in all cases, but we have certainly seen some clients succeed this way. After all, homes and condos are aspirational, and a buyer winning over another buyer can come down to more than money. It can come down to what “feels” good to the seller.
As real estate agents, we need to understand what our buyers need while balancing out what the seller is likely expecting and knowing when to push in a negotiation and when to see the bigger picture to serve our clients’ needs. We have heard other Realtors’ stories about buyers losing out on multiple homes. In most cases, this is due to a lack of skill with the agent. It’s a shame, as it can be heartbreaking for some buyers who spend months or years trying to get a home. Considering the above steps and hiring a highly skilled, experienced, and communicative real estate agent will make the difference between success and missing out on that excellent home investment.
