Deal Yourself a Winning Hand With Skillful Negotiation

Congratulations! After a careful search, you have found the right home for you and your family. But don't uncork the champagne yet. There is some negotiating to do before you close the deal. You want the best possible terms and the owners want to get the best price they can. To some extent, you are adversaries. The difference between a stalemate and a fair compromise may depend on whether you have planned ahead and developed a strategy for success. STUDY THE CARDS To determine if the asking price reflects fair market value, research the sale price of comparable homes. If you think the house is realistically priced, don't make your first offer too low. Even though you need room to bargain, remember that the seller will probably have strong emotional ties to the house; a low offer may be considered an insult and hurt future negotiations. Knowing the market is the key. If you are dealing with a real estate salesperson, he or she will answer questions about market conditions, comparable prices and sales. Agents can provide you with a lot of information and a wide variety of services. ANTE UP When you decide the time is right, the salesperson you're working with (who is sometimes referred to as the "selling agent") will assist you in preparing an offer to purchase on a standardized form required by law. The offer to purchase must give the names and addresses of both buyers and sellers, a street address or legal description of the home for sale and a date of possession. It also sets out the price, terms and conditions, amount of deposit, list of goods included in the sale price and will also set out a time and date by which the offer must be accepted. The offer is signed by you, witnessed and accompanied by a cash or cheque deposit. There is no set amount of deposit - it's a negotiable item. A deposit made by cheque should be payable to the listing broker (the company marketing the home) for deposit into the broker's trust account. If the deposit is cash, a receipt will be provided by the selling agent. The deposit money will go into his or her company's trust account and be transferred to the listing broker's trust account if your offer is accepted. Deposits are held in trust until the deal closes and then applied to the purchase price. If your offer isn't accepted, or if you can't meet any of the conditions included in an accepted offer, your deposit will be returned. If you are providing a substantial deposit, the money could be placed in an "interest-bearing" trust account to earn interest until the transfer of title. The interest can be paid to either the buyer (you) or the seller - this should be negotiated and specified in the offer to purchase. The selling agent takes your completed offer and deposit cheque to the listing agent, who is legally required to present your offer to the seller. Then there is nothing to do but wait while the seller considers your offer. The seller has three choices: to reject your offer, to accept your offer outright, or to counter-offer. To be valid, a seller's acceptance has to be made within the time Specified on the offer. When an offer is accepted, whether immediately or after counter-offers, it becomes a legal contract binding on both parties to the transaction. Although you hope your offer is immediately accepted, the seller could come back with a counter-offer. Whatever the answer, it will be quickly relayed from the seller through the listing agent to the selling agent and on to you. THE COUNTER-OFFER A counter-offer shows the seller is interested in reaching a deal, but wants to adjust certain items in your offer that weren't quite acceptable. Usually negotiations simply consist of an offer, a counter-offer and agreement, but can be more involved. Negotiation takes patience, knowledge and some give and take. The key areas for negotiation are price, possession date, terms and conditions and possessions other than the home itself. An interplay of these will determine where you and the seller are likely to compromise. For example, if you stand firm on your purchase price, you might have to take earlier possession to clinch the deal. Or the sellers might want a little more money than you first offered but may be willing to give you something they weren't going to include at first. Usually negotiations are minimal. But if you are involved in longer negotiations, always be open and honest about your wants and needs. Frustration or finalization depends on whether both parties show a real desire to reach agreement through openness, good faith and honesty PLAY IT SAFE The offer to purchase form outlines items normally included in the purchase price of a home. It also has space for extra items that may not normally be included and for items to be specifically excluded. Items which normally stay with the home - things like light fixtures, cabinets, built-in shelves - are considered fixtures. If there are specific fixtures you wish to be included in the purchase price, you should note them on the offer so that there is no question about it. Items which are not attached to the property and are movable are called chattels. Examples would be the wood pile, some appliances, decorative mirrors, fireplace tools, and so on. If there are chattels you want to be included in the deal, put them in the offer. There are sometimes fine lines between what things are considered fixtures and chattels. For example, the built-in system of hoses and outlets for a central vacuum system is considered a fixture, while the canister and accessories are generally considered chattels. The following items are some of the most common items which should be itemized in an offer: central vacuum system storage shed swing set water purifier pool accessories wood burning stove dishwasher mirrors appliances garage door opener alarm system ceiling fans window coverings fireplace screen, tools, woodpile It is essential that the offer to purchase contract clearly states which items stay with the home and which ones the sellers take with them. Never take anything for granted. WILD CARDS You may want to make your offer subject to one or several conditions. There are two kinds of conditions common to offers: the "condition precedent" and "condition subsequent". Conditions precedent are most common and have to be satisfied before an agreement is binding. If they are not, there is no deal. Conditions subsequent must be satisfied after the deal is closed. Failure to satisfy these conditions doesn't affect an agreement's validity but gives a buyer the right to sue for damages. A conditional offer may be countered with a special clause or condition called a "48-hour clause". This is used by sellers to accept a buyer's conditional offer and still leave room for another offer if one comes along. It lets a seller give notice to the prospective buyer that another acceptable offer has been made and the buyer now has 48 hours (Sundays and holidays not included) to satisfy all conditions in the original offer or to withdraw them. BETWEEN SHUFFLES You will be busy between the seller's acceptance of your offer and actually taking possession of the property. For most people, arranging financing is a number-one priority. You should also consult a lawyer and provide copies of all required documents so the conditions of the contract can be met. Don't forget you will need to alert the phone company, utilities, post office and other services of disconnection dates and get installation and connection dates for your new home. You will also have to send the required change of address notices for your driver's license, credit cards, banks, newspapers and others. Tell your friends and relatives about your new address and phone number. Confirm a convenient moving time with the sellers and make your moving arrangements well in advance. The transaction isn't complete until you have title to the property transferred into your name. Registering title and mortgage documents at the land titles office usually requires a lawyer and the payment of legal fees. Your lawyer will do a title search of the property to confirm that the property is registered in the name of the seller and to see if there are any outstanding caveats, liens or encumbrances registered against the title. All steps necessary to complete the legalities of the transaction will be done by the lawyer on your behalf, including obtaining a building location certificate, zoning memorandum, tax certificate and information from utilities companies. Your lawyer will also make arrangements for collecting money due on closing of the deal, prepare documents for your signature and forward funds in trust to the seller's lawyer for possession and transfer of title, clear of all encumbrances. The transfer of keys will usually be done through the lawyer's office, with a variety of trust conditions in place for the exchange of keys and money. HEAD FOR HOME Now that you have made all the right moves to close the deal - you gathered market information, were flexible during negotiations and planned ahead - pop the cork on that champagne bottle and toast your new home!