So you've found a home that you love - what's the next step?!

Does the home meet most of your family's priorities? Realistically, it's rare that you don't have to make some compromises. The perfect home seldom exists!

Does it meet with the criteria for being a sound real estate investment? Remember, those are good location, good bones, and fair market value.

If so, it's time to have your agent draw up an offer. Once you feel you have found the right house, take as much time as you need to digest the decision. Sleep on it if you need to, but don't let any more time go by than is necessary.

Good houses that are fairly priced, sell quickly in every market. It is very likely that there will be other families that have searched extensively and have the house on the top of their list. You don't want to end up in competition, if you can possibly avoid it. This is when decisiveness pays off! Have faith in your own good judgement and go for it!

First Steps

Good negotiating skills go a long way to getting the most home for your hard earned dollars. Your agent will gather information and feel out the situation on the other side by speaking to the listing agent and asking questions. Also, similar homes that have recently sold in the neighbourhood will be compared to estimate market value.

Condition Clauses - It is normal to feel nervous, but your agent will include in the offer the conditions that you need for your protection. These days conditions on financing and inspection are very standard. Condition on the house passing for insurance purposes is also a good clause to include, particularly on older homes.

Condition on Financing - Even if the house is well within your affordability but you have a high ratio mortgage, you need to know that the home appraises out for mortgage purposes. It is good practice anyway for your protection.

Condition on Home Inspection - A qualified building inspector will come in and inspect every component of the house (preferably with you in tow). There are always minor issues with every home. If, however, a serious problem is found that you were unaware of, this can be reason for release from the offer (depending on the inspection clause). Usually the best part of the inspection process is that you will learn in detail how to maintain your new home.

Seller Information Statement - It's fairly standard for the agent to ask for the Seller Information Statement. It is a detailed questionnaire signed by the seller describing the condition of the property, to the best of his/her knowledge or belief. It is not, however, warranted information and the seller can choose not to complete the form. 

We did not include Condition on Sale of Buyer's Property, as in the stronger real estate market that we have experienced in the past number of years, this condition is seldom accepted. It may, however, be considered if the home has been on the market for awhile, the 'back up' property is in a lower price range, and the seller's agent feels that the back up (your house) is priced correctly and would be easier to sell.

You will sign a buyers agency agreement, if you have not previously done that, and this lays out the relationship between you and your agent. You will also sign a document confirming the agency relationships (who is looking after who) and how the agents are being paid). Please see agency relationships.

Negotiation

The three main areas of negotiation are:

• Price
• Inclusions (usually appliances, window coverings)
• Closing date

Price is usually uppermost on the minds of both the buyer's and seller's. As a buyer, you will want to know how much you can negotiate off the price and where to start. In the end, the value of a property is the price that a willing buyer will pay to a willing seller.

The motivating factors for each party are key to the transaction, so pressure on either side is likely to affect value. A good agent, much like a detective, will know how to ask the questions that unveil such information. The other most valuable information is the recent sold comparables. Your decision about the price at which to begin negotiating should be based on these two benchmarks.

You will want to leave room for negotiation unless you are in competition, in which case, all the rules change and you often have just one shot at your best offer.

How much negotiation room to leave? This is unique to each situation, and also depends on how well priced the house is and how long it has been on the market. The length of time on the market is another factor to consider. You can expect to pay closer to the listing price the less time the house has been on the market. Listen to the advice of your agent. From your first offer, you want to show you are serious and dealing in good faith.

Offers in Competition

This is a very different story, and takes a very different approach. Great for the sellers and lousy for the buyers! The buyers and their agents are completely in the dark as to what the other party/ies are offering. So a bidding war is a misnomer.

Ask yourselves what is the best price you would be prepared to pay for the house and go with that. Put your best foot forward and make the offer straight forward, with as few conditions as you are comfortable with. Your agent will advise you on this. The conditions you include would depend on your individual circumstances.

Sometimes you'll get a second chance to sharpen your pencil, but don't count on it! The seller's and their agent will review both or all offers, and then decide how to precede. The sellers may:

- accept one offer over the other/s
- choose to work with one offer and send the other/s away
- send them both/all back to do better. This can happen more than once if the offers are close.

Offers in competition are like sudden death overtime in hockey. It's over quickly, with a winner and a loser, and when it's over, it's over!

The human dynamics that influence the selling price:

• Time on market
• Personalities involved
• Vendors motivation. Are the seller's under pressure to sell? If there is pressure to sell, this is not information that will be readily disclosed by the listing agent, but something that your agent would hope to get a feel for
• How well is the seller's agent looking after the seller's interests?
• How reasonable/realistic is the seller? (this can be related to time on the market). If the home has been on the market for six weeks, the owners will be far more likely to be willing to negotiate with you than if the home has been on the market just a week or so.

• A house that started out overpriced and has languished on the market.
• A house that is unattractive or dirty - for example, dirty broadloom, unattractive colours, too much furniture. People buy emotionally, and most people can't visualize the potential of a home
• Timing - buying when there is a lull in the market, or buying a home that has been on the market a long time
• A house that is brand new on the market that others haven't yet had the opportunity to see (this rarely happens, and when it does it usually generates offers in competition!).

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