Research pays when it backs up smart haggling
It is a paradox that for the most expensive purchase most folks will ever make,
first impressions, alias curb appeal, can be more persuasive than inspectors’ reports,
price comparisons or title searches.
Sellers know it and so strive to have potential buyers walk away with a sensory memory.
That can be making muffins with lots of cinnamon, fluffing up the curtains, or
putting flowers in the bathrooms. After all, it is easier to remember how lovely a certain
bungalow seemed than the amperage limit on an electrical panel.
The adept buyer needs to get past first impressions. That means diligent comparison
shopping and going to open houses to gauge the market.
Some homes have been selling in an auction atmosphere the past few years. In June,
50% of ComFree-listed homes that sold went for more than the asking price. But
inventories are rising. That means setting a market-friendly price will once again be the
most critical aspect of a successful home sale going forward. As a buyer, be aware
that the market is changing
But in a few western Canadian markets, Winnipeg among them, some homes still
sell for more than their initial asking price. Thus, one approach has been to make
a civilized overbid of 5% to 10% of the asking price. If the home were desirable, it would
sell for more than the asking price. Getting a bid in at the head of the queue can be key
to getting the house you want.
You can also appeal to the seller’s custodial instincts. If the seller has lavished a lot of
money and time on a house, had it in his or her family for decades and clearly taken the
time to maintain the garden and keep windows spotless, a buyer can get to the head of
the “emotional queue.” That’s the mental priority the seller has. He may accept a bid
a few thousand dollars less than a higher bid if it comes from someone he feels has the
same regard for the property.
When it comes to pricing your bid, it is vital to get a sense of how long this home
has been on the market and how long the average home is now on the market. (These
times will lengthen as inventory increases.) Each neighbourhood, indeed each block,
can be different, so it is important to ask the buyer or anyone acting as a representative.
The longer the time a home has been waiting to be sold, the more impatient the vendor
may be to move it.
Chat up neighbours or even someone who knows someone. There may be gossip or inside information on the house you want.
Try to find out if the home has been traded a great deal. If it has, there may be reason to investigate further to determine
if there is a reason. That could be anything from obnoxious neighbours to street crime to something
wrong with the foundation of the building.
You can build up a sense of price and you can learn the pluses and minuses in each
neighbourhood and among neighbourhoods. What is the reputation of neighbourhood schools? If you golf,
is there a nearby course you might want to use? The questions you can ask are endless and every answer
can provide a filter that reduces many houses in the market to a few you may want. Then you can prioritize
your search, price in things you do want and reduce prices for things you really don’t want.
In the market for existing homes, no two are ever the same. There is no other market
where using up some shoe leather pays so well. To paraphrase the late great pianist
Artur Rubinstein, who first played Carnegie Hall at the age of 19, what’s essential is
research, research, research.
Andrew Allentuck is the author of Bonds for Canadians: How to Build Wealth and Lower
Risk in Your Portfolio, published by John Wiley & Sons Canada Ltd.
House prices can be thought of as lying under a bell curve Smart vendors who
want to get on with their lives will try to price their houses at the middle where there is the most action.
Ambitious vendors may want to experiment with pricing far to the right of middle where there are
relatively few properties at a given
size and asking price. Desperate vendors may be willing to go far to the left, offering
a special value to buyers in exchange for getting a bid. Thus the range goes from desperate
to greedy.
At any offering price, there are bidding tactics you can use to pull down the price.
Check neighbouring houses. If they are in worse shape, that will tend to have a negative
effect on the price of the house in which you are interested. Check a map of assessed
values. Assessed values are quite different from market prices, but there is a lot you
can learn about relative prices. Winnipeg’s assessments can be found online at www.winnipegassessment.com
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