AGREEMENT OF PURCHASE AND SALE

GUIDELINES SETTING THE STANDARD

Negotiating Power

How real estate is bought and sold today, helping to position our clients to have the upper hand provided our 12 guidelines when faced in a negotiating battle.

NEGOTIATING THE PURCHASE CONTRACT

POINTS OF NEGOTIATION

Price

Buyers don’t want to overpay or price themselves out of a resale in the future, while sellers want to make sure the deal makes sense for their financial plan.

Closing Cost

Buyers have to pay prepaid closing costs for their mortgage, which is money that the mortgage lender holds in escrow, for items like taxes and insurance. A buyer may ask a seller to pay a flat dollar amount toward their closing costs, or up to a percentage for what’s an allowable contribution for a lender. If [a buyer] asks the seller to make a concession on [his or her] behalf, they’re likely going to have to pay a higher asking price.

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Closing Date

Sellers can negotiate for speed when they need to get their capital out of the home fast; and closing dates will affect buyers' monthly cash flow once they own the home. Keep in mind, when a buyer closes on the house, they skip the next month’s mortgage payment. Maybe they want to close at the beginning of a month so they skip the next month.

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Financing Contingencies

Sellers don’t like to tie up their property for 30 or 60 days, which is what’s required when there’s a financing contingency in place .Buyers competing with all cash offers need to figure out if they can drop the financing contingency, which will shorten their closing time line. Buyers can do this by having their mortgage fully approved prior to making an offer. That pre-approval shows that their finances are in order and they can afford the property.

Home Warranty

A buyer can ask for a home warranty, or a seller can offer one. This protection plan covers the home’s appliances and systems, like the air-conditioning and hot water heater, in the event these things break or need repair.

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Leaseback

The process of moving into a new home can be highly stressful and labour intensive. “If a seller needs a little extra time to get into their new home, [buyers can] offer a zero-cost rent-back for 30 to 90 days to entice the seller to accept the offer over others. Peace of mind is a valuable negotiating tactic

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Home Repairs

Buyers also have a ton of room to negotiate when a home needs a lot of updating. When a home is out-of-date with appliances that don’t work, popcorn ceilings or cracked pool foundations, for example, a buyer can ask for a lower price because of the cost to bring the home back to today’s standards. Sellers can also specify that their house is being sold “as is” and that they won’ t make any repairs.

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Appraisal Contingency

If the buyer’s getting a mortgage, [the seller] could push for the buyer to waive the appraisal contingency. But then they have to make good on the amount of cash to close, If for some reason  the appraisal falls short and the bank will lend them [only] so much money based on an appraised value.

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Furniture

Personal property like patio furniture, chandeliers, window treatments and cabinets, is also up for grabs. If the buyer wants all the furniture, it becomes very much of a trade off and compromise between what everybody wants. Whatever’s excluded needs to be stated when the contract is finalized.

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Appliances

The stove, dishwasher, microwave and any built-in appliances may come with the property, but not the washer, dryer and refrigerator. In different markets, people don’t always convey every appliance - they don’t want to give it all away. They want to see how the negotiation goes.

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Inspection

While waiving an inspection often comes with "buyer’s remorse," buyers can try to shorten the time frame for an inspection, from 10 days to five.

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Condo / Co-Op Assessments

These are used to maintain the building’s common areas, like the roof or aesthetic improvements, and sellers typically need to settle if there’s an open assessment. That becomes a negotiation between the seller and the buyer.