To determine your initial price for the property work with your Toronto real estate agent to understand the fair market value of the property. To establish a fair offer price use the factors outlined in this article to help calculate any increase or decrease in value. Be sure to keep your fair price determination to yourself. If your Toronto real estate agent is a dual-agent or subagent they are obligated to tell all parties if they know. If however they are a buyer agent then that information is safe to share with your Toronto real estate agent. #1 Understanding the Market - Looking at similar and recent sales in the area is key. Feel free to look at past sales but keep in mind how much the market has fluctuated since then. Look at similar markets too. If there have not been any recent sales in your neighborhood venture over to a comparative one nearby. #2 How is the Current Market? - In a slow buyers market the vendor will be more giving during negotiations. Contrastingly in a hot sellers market your offer needs to be generous to even be considered. Toronto, however, is generally a balanced market where there is not a set advantage to bidding either your minimum or maximum up front. It can be difficult to decide on your negotiation strategy in a balanced market, one approach is to allow other offering price factors help you choose. Although it is very difficult for anyone to accurately predict market changes, asking your Toronto real estate agent for their thoughts can help you determine if the market is in transition. Even during lengthy periods of balanced market spontaneous activity can occur causing times of instability or inactivity. #3 How Long has it Been Listed? - Generally the longer a property has been on the market, the more willing to negotiate the vendor becomes. Use this factor to your advantage during the negotiation. #4 Why is it For Sale? - Price is not affected by the vendors motivation to sell. Willingness to negotiate however is greatly affected. If an owner needs to sell your chances at price negotiation are greater. By the same token, if an owner does not really need to sell then your chances of negotiation are minimal. Then the motivation for selling is strictly profit you will find you need to pay a significant premium to obtain the property. #5 How Much Did it Cost the Owner? - Although the price the current owner purchased the house at does not affect the current market value it may affect your offering price. But do not become fixated on what the vendor paid for the property. #6 Any Home Improvement Costs to Consider? - Money spent on major improvements to the house need to be considered. Your Toronto real estate agent can help you account for things like new flooring, extra rooms, renovated kitchen, etc. #7 Will Money Need to be Spent to Improve Property Conditions? - Evaluate the property condition. Your offering price should be affected by money that you will need to put in to make any improvements. To help assess the situation a home inspection should be done before you make your offer. #8 Costing Out Conditions - You will need to use a premium dollar to attract that vendor if your offer is conditional upon any contingencies. Some conditions will cost you more than others. Speak to your real estate agent to understand the price implications of your desired conditions. #9 Multiple Offer Bidding War, What To Do - In general the price you are willing to pay should not be affected by a bidding war, only your pricing strategy. Your best bet is to figure out your maximum offer price and stick to it, you need to be prepared to walk away.
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