It’s time to negotiate!
The offer/counter-offer stage is where the buyer and seller can communicate through the contract of purchase and sale. There are numerous elements to a contract of purchase and sale, so it is vital that your REALTOR® has a clear understanding of your main goals and knows where you can be flexible in terms of what you are willing to compromise on. An experienced and skilled negotiator is essential to helping you achieve your goals.
There are six major components to an offer:
1. Price:This is what most Sellers will gravitate towards when first reviewing an offer.
2. Deposit:This is the “earnest” or “good faith” money that a Buyer is willing to put up as part of their offer.
3. Terms:These include the total price of the offer, as well as the financing details. The buyer may be arranging their own financing or may wish to assume your mortgage if the interest rate is attractive.
4. Conditions:Conditions are certain aspects of an offer that must be fulfilled in order for the sale to go through and close. Common Buyer conditions include: “subject to inspection” or “subject to financing”. These conditions will also include a date whereby the outlined conditions must be met or waived by the Buyer in order for the sale to move forward, prior to closing.
Sellers too, can insert conditions into the offer. For example, a Seller could insert the condition of “subject to the seller ceasing to be obligated on a previously accepted offer.” Other possible conditions include Seller’s warranties, credits for repairs and so forth. Subjects will have a date that they must be removed by, prior to closing, making the offer “firm”. This is generally when the outlined deposit, or an even larger deposit, is put forth by the Buyer and goes into the REALTOR®’s trust account.
5. Inclusions and Exclusions:
These may include appliances and certain fixtures or decorative items, such as window coverings or mirrors. Click for more details on exclusions to a purchase (chattels and fixtures) from Step 6.
6. Completion, Possession and Adjustment Dates:
In Canada, the completion date is the day that the title to the property is legally transferred to the Buyer and the transaction of the funds is finalized (Except in Manitoba and Quebec). The possession date is generally the day after completion date. Note: In B.C. the Possession Date is legally 1 to 3 days after the closing.
The adjustment date is generally the same day as possession date; it is also the day that the Buyer assumes responsibility for any payments to do with the property, such as maintenance fees, taxes, etc.
Helpful Tips for Negotiations – Keep your eye on the prize
Remember your goals and negotiate the best deal for you towards that end. Don’t get caught up in the smaller details for the sake of ego, principle or memories. You don’t want to lose your entire sale based on a light fixture in the dining room.
Understand the realities of the market
There is a reason it’s called negotiating. Remember that fair market value for your home may not match with your ideal wish price. Be sure to keep the lines of communication open at all times.
Respect the people and the process Sometimes it’s hard not to be confrontational when things aren’t happening exactly as planned. But remember the old adage, “you catch more flies with honey than vinegar”. Calm, respectful, quietly assertive and collaborative – that’s the winning way.
Prepare for the negotiations
Collaborating with your REALTOR® ahead of time is very helpful in understanding what you are willing to move on and what is non-negotiable. Clear communication is key to ensuring that you and your REALTOR® are on the same page – remember, you are a team! Negotiating is all about the give and take. Understand ahead of time that you will be making some concessions to put this deal together – that’s what it is all about.
Know when to fold them
Sometimes, no matter how hard you try, the Buyer and Seller have such completely different objectives that you won’t be able to come to agreeable terms, no matter how long the negotiations take. Sometimes you just have to move on…
This is 2nd of 2 Blog posts in Step 8 of a 10 Part series. Go to Step 9: Performing Due Diligence