Demystifying Real Estate Myths: For Buyers
By Eleni Akrivos – mtltimes.ca
You have decided to get into the real estate market, and most likely will start your search on-line. Just like first time parents, as a buyer everyone will want to give you plenty of advice! Should you listen to your family who tell you that you need to keep lowering your offer to avoid overpaying for the house? How about your colleague that tells you not to worry about the price, since you can lower it after the inspection, because that is what they did.
You will most likely end up with conflicting information from different sources. Although the purchase process is similar for everyone, I promise you that no two transactions are alike! You will be faced with specific circumstances in your transaction that will need the skill of a professional. There are no definite right or wrong answers, but I would like to demystify some of the most common myths buyers are facing today.
1- “I have enough information online, I don’t need to work with my own real estate broker?!” Answer: False
A common story I hear when meeting sellers, is that they regret their first real estate experience and have overpaid for their first home. I often hear that they did not have a relationship with the agent they bought with, and felt they were not well informed or represented. As a buyer, you should have the privilege of having a professional protect your best interests and work on your behalf to get you the most favourable price and conditions possible. Work with a broker that understands your needs and knows the market well. Most brokers want you to recommend their services and will go out of their way to give you a top notch service!
2- “Since we are in a buyers’ market now, we can make low ball offers?!” Answer: False, not in every case.
Make sure you know the market you are bidding in! Your broker will give you a glimpse of the recent sold homes in the area, so you can make a solid offer. Serious sellers these days will know the comparable sales and as a serious buyer you need to play the game right. Going in with a very low offer, especially if the home is priced to sell, will rub sellers the wrong way. Your broker is skilled at analyzing the sales, and coming up with an offer that is favourable to you and the sellers. Don’t be surprised if home is priced aggressively, I have seen offers at the asking price, even in a buyers’ market, it is case by case.
3- “There are multiple offers on the home I want, if I make the highest offer the seller will have to agree to take my offer?!” Answer: False, not necessarily.
Your offer will be comprised of not only the price but other factors such as move in and closing dates, deposit, financing and inspection conditions and perhaps some other requests such as included items in the sale. All that, along with the rapport your broker and you have built with the sellers, will determine whether your offer gets accepted over others. Make sure your offer is in line with neighborhood conditions and reflects the current condition of the home.
4- “My friends told me that after the inspection they re-negotiated the price down, I will do the same!” Answer: False, not always the case.
I hear this very often, especially from family and friends accompanying buyers. They may have purchased long ago, when sellers and buyers did not have access to loads of information. Unless something major comes up in the inspection that increases the expenses or decreases the value of the home considerably, then a price reduction is not a given. Of course if there is a small issue that arises, such as small cracks to repair, the buyers and sellers may agree on how the cost of these repairs will be covered. However, to assume that the price will always be reduced after the inspection is false. Also, after inspection, it is difficult to request that sellers repair something that has previously been declared.
5- “My sister told me that going straight to the listing broker is a better way to get a deal!?” Answer: False, really not always the case.
Many buyers have the thinking that since the listing broker controls the contract and commission, that without a second broker, the listing broker will surely cut their commission to make the deal. Please keep in mind, this is entirely discretionary. As a buyer you are making assumptions that may not be realized. If you call to visit a home and you are not represented by your own broker, the listing broker or agency may have a buyers’ broker who will be assigned to work with you. This way, the listing broker can represent the seller, and does not have to work both sides. To ask the listing broker to represent you and the seller equally and to cut their commission is like asking someone to work double the time and take half the pay. A high number of successful transactions occur with the professional collaboration of buying and selling brokers!
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