Warning, this article will greatly please buyers... but perhaps less sellers! I have managed to gather a few insider tips which are easy and practical, that will allow you to save hundreds, even thousands of dollars while purchasing a condo. As a bonus: a downloadable document that will allow your condo shopping to be much more efficient.
Have I sparked your interest? All the better. Know that in a buyer/seller market there is always room for negotiation. But how does one negotiate efficiently?
What is the first step? Evaluate your budget. Each person has a different ability to pay that depends on one's salary, savings, borrowing capacity, etc. This budget greatly impacts what neighbourhoods to target, and the room for negotiation is not the same everywhere. Indeed, if more options are available in a neighbourhood, negotiating will be easier. For example, Rosemont offers more projects than the Plateau Mont-Royal, however the demand is higher on the Plateau. Do the maths.
Felix Cotte, a real estate consultant, reminds us that the budget allocated to the purchase of a habitation should range between 25 % and 40 % of the family gross income. This percentage should include all expenses such as heating, taxes, interests etc. "To have a detailed and pre-approved budget in hand is the best way to be taken seriously by the seller", underlines Felix Cotte.
Once the budget is established and pre-approved, the real work begins. Start by visiting the projects that really interest you, by fixing a price, taxes included, with the contractor. During those visits, it is primordial to assess your housing needs. I recommend to use the following document that you can fill before your visits and that you can bring with you in order to compare the offers.
The Art of Presenting an Offer
Warning: never sign a purchase offer during your first visit, unless you find the perfect house in the perfect neighbourhood and that you know that you will lose this opportunity as soon as you leave.
Let's say the condo you would like to buy is $ 295,000, but your budget limit is around $ 275,000. Nothing is preventing you from submitting an offer anyway! If you are pre-approved and if you offer a generous deposit, you could influence the seller. In the worst case scenario, you could receive an interesting counter-offer. If the offer does not budge much, you can target what is included in the price. This could allow you to save a lot of money and satisfy the seller at the same time. Warning: the buyer should stipulate that his offer is valid for 24 hours only in order to prevent the process to be slowed-down and to lose opportunities elsewhere.
Miscellaneous Tips: the Tricks of the Trade
Here are a few proven tips that I have gathered for you:
- If you are ready to take ownership very quickly, the seller will be more inclined in lowering the price.
- It is more likely that the negotiation will turn in your favour if the condo is already built and empty. Since the contractor has paid more fees, he will be more motivated to sell quickly.
- Most contractors need to pre-sale between 40% and 50 % of the units before receiving a loan. Ask how many units are already sold and know, if it is close to these percentages, that the contractor will be more inclined in giving you a good price as he will want to attain the quota faster.
- If the project is near completion, it is sometime possible to get big discounts on units that are not yet sold. These are often pricey units, but the discount will only be even bigger. We are talking here of penthouses with discounts ranging between 10% and 15 %, or that will include a $ 40,000 parking spot.