One of the perks of buying a new construction home is that you don’t have to compete against other buyers for the same house or unit. Yes, there are moments when you need to be quick with your decision making because someone might beat you to the floor plan you want, but at least you know that if you get there first, it’s yours to buy. When it comes to rentals and resale – especially in a hot market like the GTA – you’re up against other offers, so it’s important that you have some real estate negotiation tactics up your sleeve.
You’re probably thinking, “isn’t that what a real estate agent is for?” And you’re right, in addition to understanding the paperwork and finding properties for you to see, your agent should have negotiation experience and tactics of their own. That doesn’t mean you shouldn’t be well equipped with your own set of rules and tricks.
1) Have a budget and don’t budge
This may be one of the most important tips you read on any blog or in any book about real estate deals. Having a budget you can afford is the foundation of your negotiation. As long as you know the highest you’re willing to go in a certain real estate deal, you can confidently go back and forth until you hit your limit. If you don’t seal the deal because someone offered more than you, then it wasn’t meant to be. Accept it and move on.
2) Offer more up front
Whether you’re renting or buying, the landlord or seller wants to know you’re serious. If you feel like there are other offers, you can sweeten your deal by paying an extra month up front or nudging up the deposit on your offer. The offer with more money up front will stand out. This can be the move that tips the scale in your favour.
3) Prove your longevity
This one doesn’t apply to buyers, but it’s a strong tactic for rental deals. The rental market is on fire right now. Bidding wars are becoming more common and owners are increasing monthly rents at a faster pace. If you find a place you like and can see yourself living there longer than one year, then submit your offer with a two-year lease.
Some owners find this attractive because it means they don’t have to find another tenant for another two years. If you’re going to do this though, keep in mind that the owner will likely raise the rent in your second year. The amount or percentage should be clearly outlined in your lease if this is the case.
4) Don’t waive the inspection
It’s common for sellers to ask a buyer to waive the home inspection; it speeds up the deal and it eliminates the chance of an inspector discovering an issue with the property. Do NOT waive the inspection no matter how much it would sweeten your offer. Without an inspection you’re rolling the dice and you can lose big. What if you need a new roof? What if there’s mold in the walls? These all become your problems if you don’t conduct an inspection before closing.
5) Don’t ask the seller to cover closing costs
Closing costs can be thousands of dollars depending on the real estate deal. You might be thinking that it’s a drop in the bucket for the seller and a big cost for you, but that’s not the case. If your closing costs are $10,000, why would a seller want to cover that? Wherever they’re moving, they likely need to pay closing costs as well. The moment you ask the seller to cover closing costs, your offer looks weak.
We hope these real estate negotiation tactics better equip you for your next purchase or rental deal. Like we mentioned in the beginning, you don’t need any of these tactics if you’re buying directly from a builder or developer in the new construction market.