Common Misconceptions Among Buyers

Common Misconceptions Among Buyers

Misconception: If you pay list price, you're paying too much.

Many people have a romantic self-image of themselves as being Canada's Donald Trump - the consummate tough negotiator.  But part of being a great negotiator is going into the sales discussion armed with all the facts.  If comparable properties in the area are selling for $646K plus or minus a couple of thousand dollars, what really is the chance of the owner selling to you for $625K - would you, if you were the seller?

If you don't know what the current market value is for homes in the area and whether the market is appreciating or depreciating, you don't know what a fair price is and you're likely to miss out on a great deal by trying to low ball a house that's already priced well.  One of the most valuable services I provide is detailed analytics of the area, and projected assessments of future growth - this information is vital to making a decision you will be comfortable with now and five years from now.

If the house meets your goals, is within your budget, and is priced competitively, it's a bargain and you should make a strong offer. Get assistance from a professional to help you recognize a good deal and grab it before it's gone.

Misconception: Power of Sales are the best buys.

Many buyers find out the hard way that Power of Sale properties are full of headaches, may need extensive repairs, require great patience over an extended period, often don't have the criteria that's most important to you, and may never close.

Power of Sale properties must sell in Ontario "as is". While you can certainly ask to bring in your Home Inspector, the seller will not take the property off the market, and someone else's offer may be accepted before yours, after you have paid $300 or more for the inspection.  These properties are often in poor condition with challenges that may take longer than normal to resolve.  While these may be a good buy for an experienced investor, or Flipper, they are NOT for the first time, or conservative home buyer.

 

Misconception You get a better price if you buy directly from the owner.

Bargain hunters sometimes avoid Realtors, thinking that they will get a better price if they buy directly from a FSBO.  Also, many "direct approach buyers" have credit problems, and ask the seller to for a Mortgage Takeover.  DON'T EVER DO THIS.  You will remain personally responsible if the Buyer defaults.  What this Buyer is really telling you is that a Bank won't give them a loan, but you should.    Buyers will always insist the price is too high (which is generally is, since advising a Seller of the realistic market price is a key function a Realtor provides), and demand the 5% Commission taken off, or rebated to them in Cash.  Meanwhile, the sellers are also trying to save on the commission, so they're not getting expert advice either and often price their homes above market value.  Additionally, emotions become quite volatile since you are coupling people's money, and where they live - the two hottest hot buttons anyone has.  Since the Lawyer gets paid by the hour to process the paperwork, the Seller may quickly exhause any cost saving they hoped to realize after a few wrecked deals.  The Realtor by contrast gets paid only AFTER the deal has closed.

The end result is often that a buyer pays too much or the FSBO is unable to get the house sold. A savvy Realtor working on the buyer's behalf, armed with market data and great negotiation skills, is much more likely to get a great deal than buyers can by negotiating for themselves.

 

If you're buying a house, it's a great idea to find a good Realtor and listen to their advice.

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