Buying real estate, when everything is boiled down to it, is a negotiation. Not only that, but it’s also the most significant negotiation from a dollars and cents perspective the average Canadian will do in their life. A question we’re often asked as real estate agents though, is what’s negotiable.
Now, it’s clear that when all other things are created equal, and when the negotiation ultimately comes to a close, the most critical negotiation point is the selling price, there are several things outside of the price that can be negotiated, and any seller or buyer who is aware of these items, and works with their agent and the party on the opposite side of the negotiation will be in a far more advantageous position to reach an agreeable deal, and a deal which serves their best interests.
Looking for real-life real estate advice and insights? Listen to our podcast, The Last Honest Realtor right here or wherever you get your podcasts.
The Beauty of a Standardized Form
In Ontario, we are lucky to have almost every possible consideration of a deal reflected in pre-printed paperwork that is used to complete a real estate deal written by the Ontario Real Estate Association, and this is done in the spirit of consumer protection. While it’s very unusual for anything in those forms to be adjusted as part of the negotiation, there is a lot that is left to be edited or changed by parties in a transaction and their agents, and those are the items that are best to focus on when pursuing a real estate deal.
What is a real estate purchase agreement? Read more about it here.
The First Negotiable: Price
So, what is negotiable? First things first, as alluded to above, the sale price is the most critical of the negotiation points. To an uninformed participant in a transaction, it is the negotiating point, and even to those with a more holistic view of the process, ninety-nine times out of one hundred it’s the most important point. When it comes down to it, if an offer doesn’t contain a sale price that falls into a band of acceptable for either party there is likely no deal.
Selling your home is exciting! But it can also be a little daunting and maybe a touch stressful. Here are a few more posts about selling a home in Toronto to help you out:
- Do You Need an Open House to Sell Your Home?
- Why Hiring a Friend to Sell Your Home Might Be a Bad Idea
- Should I Get a Pre-Listing Home Inspection?
The Second Negotiable: Closing Date
However, there are a lot of additional levers available to parties in a real estate transaction that can be negotiated, some more typical and crucial than others. One that is easiest to understand is the closing date of the deal, or the date on which ownership transfers.
Many considerations factor into an ideal closing date of a deal, but most typically it revolves around if there is another transaction a buyer or seller is undergoing simultaneously that needs to be accommodated, and then furthermore often than not a quicker closing date is typically preferable to a seller, whereas a longer closer date is preferable to a buyer.
While that’s not always the case, life circumstances can dictate otherwise, in this case, a quicker closer date results in the seller getting their money sooner and ridding themselves of the carrying cost of owning the property (mortgage, utilities, taxes, etc.), whereas a longer closing date allows the buyer to wait longer to part with their money and assuming those ongoing costs.
A buyer and a seller who collaborate to understand the true motivations and desired closing date of the party they are negotiating with, and then use that information in their negotiations, puts themselves in a better position to both secure a deal, and secure an agreeable deal.
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The Third Negotiable: Deposits
Further to that, the deposit associated with the purchase is something can be negotiated. That of course includes the amount of the deposit (a larger deposit is more desirable for a seller), but it also includes when the deposit is delivered to the seller. “Herewith” is terminology often used in strong offers from buyers, which means the deposit is in hand and ready to be delivered with the offer as soon as it’s accepted.
Alternatively, a less compelling offer for a seller but one that might give more peace of mind to the buyer is an offer that is delivered within 24 business hours after acceptance, which while technically not legal can lead to a buyer deciding to walk away from the deal, and without the collateral of a deposit held in trust, it makes pursuing the buyer for a breach of contact much more difficult, and in many cases sellers decide doing so isn’t worth it.
The Fourth Negotiable: Conditions
Associated conditions to an offer are another consideration that can be negotiated. An offer that has conditions is typically advantageous for the buyer, giving them the opportunity to walk away from the deal and get their deposit returned if the buyer does not find the home inspection satisfactory, or fails to secure agreeable financing, as example. Alternatively, an unconditional or “clean “offer is firm and final, and that is more desirable to the average seller.
Still have real estate questions? Here are a few more blogs for you to check out:
- Should I Renovate My Home Before Selling?
- Why Your Home Isn’t Selling
- Are Discount Real Estate Agents Worth It?
The Fifth Negotiable: Inclusions/Exclusions
Finally, the last conventional negotiation point in Ontario is inclusions and exclusions when it comes to chattels and fixtures. In an average transaction, all appliances, light fixtures, and window coverings are considered inclusions, whereas anything else in the home is an exclusion.
However, let’s say a seller is attached to a certain chandelier in the home. In that case, the seller could negotiate for that chandelier to be identified as an exclusion. On the other hand, if there’s a piece of furniture or something like a hot tub that a buyer would like to have been left behind and transfer ownership as part of the deal, the buyer can negotiate to have that involved in the deal as inclusions.
Time to Think Outside the Box
If a seller or buyer wants to go out of the box, there are some less typical items that can theoretically be negotiated. If interest rates are high, a seller can offer a buyer a Vendor Take Back (VTB) mortgage, which can incentivize a buyer with a more palatable monthly mortgage payment. A buyer can negotiate to have the seller cover closing costs, moving costs, and the costs of professional cleaning, or in a condo, the person responsible for maintenance fees or a pending special assessment could be discussed.
Selling a house is a big deal. But how much work does it involve? Read about how much work it takes to sell a home in Toronto right here.
Your Best Bet: Work with a Trusted Real Estate Agent
Ultimately, there are typical things that are negotiated in real estate transactions in Ontario, and working with an agent who is aware of these items and can advocate on behalf of their client to use these items to reach a deal that serves the client’s best interest can be a significant advantage in a very difficult market. While many people focus primarily on the final sale price, all of these other negotiables represent a value, monetary or otherwise, and being aware of these and ensuring they don’t fall off the radar can help either complete a deal that otherwise wouldn’t reach the finish line, or reach a deal with terms that are even more desirable. It takes a capable and experienced agent to effectively navigate these negotiables simultaneously, but effectively leveraging them can be more than worth its while.
If you have any questions about negotiables in real estate deals, have thoughts on other items that can be negotiable (there are many!), or would just like to discuss Toronto real estate, please never hesitate to reach out. We love the chance to chat with our clients, and would appreciate any opportunity to discuss these with you!
Thinking about selling your home? Get in touch with us directly by calling 416.642.2660 or emailing admin@torontorealtygroup.com. We’re always happy to chat!
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