House Price Negotiation
 

Since this seems to work differently in every country we've lived I thought I'd ask. So when a house in advertised for sale with a $x price in GTA, is it normal to bargain down by 5%-10% (depending on area/demand/market rate etc etc), as you normally would in the UK, or is this like a minimum purchase price over which interested potential purchases would submit offers as per parts of Aussie/NZ?

Also is it legal to buy or sell without a real estate agent getting involved? We've managed just fine doing private sales in the past with just a lawyer doing their bit and it has saved us several $1000's.

Re: House Price Negotiation
 

You can offer whatever you like. What they take is dependent on the market. Offers have to be made in writing and are binding once accepted. There is no obligation to use a Realtor, but as they cost you nothing, cannot imagine why you wouldn't. If the property is listed with a Realtor, the seller pays the fee whatever.

You would need a notary of lawyer to complete the sale. There are a number of DIY kits for sale.

I would try and sell on my own, not sure I would buy on my own. I would not use the selling realtor though, I would have a buyers agent and not sign an agreement with them.

Re: House Price Negotiation
 

And ironically Scotland given your previous interest- "Tenders offered", ie sealed bids:cool:

Re: House Price Negotiation
 

Yeah, that was common in NZ too. Most Brits wouldn't touch with a barge-pole though. Ditto with auctions unless you have nerves of steel.

Re: House Price Negotiation
 

We brought our first house in Scotland with sealed bids- we also did similar actually in Norfolk- both certainly caused anxiety but rewarding when we got the places

Re: House Price Negotiation
 

I wouldn't unless neccesary because a seller is going to have to take into account the buying agents cut as well as their selling agent when negotiating a sale price. The less people taking a cut, the more willing they usually are to negotate.

Re: House Price Negotiation
 

Although I gather Toronto is a hot market right now and houses don't go for less than.. Well the good ones don't anyway.

Re: House Price Negotiation
 

It does not work like that. The seller's realtor (called the listing agent) agrees the commission with the house owner. If the buyer is working with a realtor (confusingly enough called the selling agent) then the listing agent splits the commission with the selling agent. If the buyer is not working with a realtor the listing agent gets to keep it all.

The question you should ask is not, "should I offer more or less than the asking price?" but, "does the asking price reflect fair market value?" If you do not know that how can you decide whether to offer more or less than the asking price? Your realtor will know. There is no way the seller's realtor will tell you.

As Aviator warned above, an offer becomes binding on acceptance and this can sometimes be within minutes of the offer being made. Your realtor will write your offer with terms to protect you. It is not complex legal work but, fresh off the boat, do you know what terms you can add to the offer and how you can write them to your benefit? A Canadian lawyer generally does not negotiate a contract. They just administer the contract you have made with the seller.

Although there is no need to work with a realtor I can't think of a good reason why someone new to the country should not do so. Many Brits seem to think they can game the system in some way by not using a realtor. They can't.

The comments above apply when the seller is represented by a real estate agent. It is different in a private sale. (Though it can be amusing to watch negotiations where both the buyer and seller think they should get all the benefit of the commission saved.) You still have to be careful with the offer. You can get yourself into all sorts of trouble if make a mistake when writing your offer.

Re: House Price Negotiation
 

The lawyer's involvement in the sale of a house is Canada is, typically, nothing like as detailed as in England and Wales. Typically, by the time the lawyer is involved it is already legally binding and, in essence, all they do is ensure that the mortgage is secured in accordance with the mortgagee's instructions (which will require the previous owner's mortgage to be discharged), and that the title is transferred into the purchasers' name(s).

Don't expect them to advise you about tenants in common/joint tenants etc.

Re: House Price Negotiation
 

We bought this house, in Ontario, by that method.

Re: House Price Negotiation
 

You're right. I don't know the Toronto market. It's not about trying to 'game the system' but a couple of things spring to mind. If the lisiting agent doesn't have to split the commission with a selling agent, then surely when acting purely in their own best interest, they would be more open to persuading a seller to reduce the price for a private sale because they'd stand to gain more commision that way than if someone paid the full asking price and they had to split the commision. The maths adds up unless you were literally halving the cost of the house.

As for legally binding offer, it seems to be pretty similar in most countries. The UK appears to be the exception. Normally I'd be adding in conditions like the offer being subject to approval the the mortgage lender, subject to whatever valuation/structural surveys are desired or are necessary to the mortgage lender, subject to whatever land/resource searches are standard etc etc. I'm assuming there are legal timeframes for which these things have to be completed in Canada? Anything else specific you would normally have on an offer that I've not mentioned? Can you make an offer where the purchase price would be reduced accordingly if a survey picked up some structural remediation that needed attention or would you instead be able to withdraw the offer and make a new one taking this into consideration.

As for current market value...well my experience to date has been that I've been able to gauge market value as well as an agent, but obviously I am not familiar with the Canadian market, so we'll see. I don't claim to be an expert and I'm not trying to be a smart-arse - but I don't like forking out money for something I am just as capable of doing myself. There have always been legit ways to get list prices and sale prices in an area, as well as the number of days between listing and completion of sales, so it's not been hard to see what is happening in the local area, combined with going to a few dozen open homes or private viewings in order to gauge a reasonable sale price and considering such things as access to road networks, local infrastructure, schools and facilities, local terrain which affects sunlight, flood risk, frost hollows etc and checking out published local development plans with local councils so you know what changes/re-zoning or upgrades might be happening in th next few years. Oh and talking to your insurance company for get quotes, as they'll usually be able to tell you if there have been a lot of claims for car accidents, burglaries, weather related damage in your area, and how your premium compares to other postcodes in the area. Really, this is all standard stuff you should be doing before buying a house anyway, and its pretty standard in most counties where there isn't a system of an agent working on your behalf.

Re: House Price Negotiation
 

Agents have a pretty tight grip on that information here, it's not just available online as in most countries. Note also that the fee to the seller of a house is agreed without regard for there being, or not being a buyer's agent; the seller doesn't save any money if you don't have one.

Opinion is strongly divided on this board within JonboyE and the people who are agents strongly advocating the use of a buyer's agent and others being less convinced. I've not found them helpful, my experience has been that just means the prospective purchaser has two salespeople pitching the house instead of one. Contrary to other experience above, I have twice used lawyers to negotiate property deals, I can't say that they were more effective than an agent would have been but I at least felt that, dodgy as they were, they were working for, not against, me. I found the better one by googling fsbo lawyers and then contacting one who was accustomed to working for sellers.

Re: House Price Negotiation
 

This is not how it works. If there is $20k commission on a sale, the lawyer deducts this from the proceeds prior to the money being distributed to the seller. This will either go to the selling Realtor in full if they are the only Realtor, or split if there is a buyers agent.

The contract with the Realtor determines commission, long before the buyer comes along. The sellers agent will advise the seller on price and market conditions, in a soft market or hard to sell property, the agent may agree to reduce commission to make the sale, if no other agent is involved. However they may not, this is not up to the seller to decide, they are bound by their contract with the Realtor.

Re: House Price Negotiation
 

OK, for the sake of argument I can, just about, imagine a scenario where a seller says they must get $400,000 after commission to be willing to sell and the buyer offers enough to leave $399,000 after commission and will not pay a penny more. A single realtor may reduce their commission by $1,000 to make the sale happen, or two realtors may agree to reduce their commission by $500 each. I don't know if either is more likely.

I don't know because I have never known of a deal where both the buyer and seller are so intransigent about the price and the difference can be reconciled by the realtor reducing their commission.

It is theoretically possible, but you have to give up so much for it.

Yes to this, as long as the subjects are written correctly you can do it all. There are virtually no legal restrictions on the deal you make. The assumption in law is that you are competent adults entering into a transaction with no compulsion to either buy or sell so almost anything you agree to is enforceable.

Four or five days is typical of the time to do your due diligence. There is nothing to stop you saying in your offer that you want six months before the deal becomes firm and that you can pull out at any time before this. The most likely outcome is that the seller will tell you to do one. Or make a counter offer that allows them to demand that you remove subjects at any time of their choosing.

The bolded bit is what gets me. All this information is available if you are prepared to put in the effort to research it. If you had to pay for it then fair enough - your time and your money - you decide what each is worth. But you don't have to pay for it. You can find out over a cup of coffee (which the realtor will pay for) what would take weeks of intensive research to find out for yourself. And it is free to you.

Re: House Price Negotiation
 

My experience is that you are extraordinarily unlucky if you have to deal with the seller's agent.