Coming off a hot year, the Toronto real estate market is slowly shifting back in the buyers’ favour. Among the many factors causing this shift are rising interest rates, economic uncertainty, and buyer fatigue. Despite a modest dip, however, prices remain quite high, as the relatively low inventory levels in Toronto keep luxury properties at something of a premium.
Below are the seven best negotiation tactics used by top real estate agents worldwide. You’ll learn that it’s not simply putting in an offer and hoping for the best; you need to do much, much more to win when it comes to Toronto real estate.
When it comes to Toronto real estate, before you sit down at that table to talk and negotiate, there are some things you should always know.
First off, know what the home is worth. Toronto luxury homes indeed hold value, but sellers often think they can get away with any list price in this market. If you believe that the home you’re eyeing isn’t worth the price tag, make sure you have the facts and figures to back that claim up; recent sales of similar homes, neighborhood values, and market trends will be immensely useful. Better yet, ask your agent to perform a comparative market analysis (CMA). A CMA is a tool used to estimate the value of a specific property by evaluating similar ones that have recently sold in the same area. A successful CMA is also a substantial negotiating tool that can anchor or elevate subsequent bidding.
You should also be as well-versed in the particular house as possible and come to the table with realistic figures. Will it cost you $20,000 to fix the pool in the backyard, $15,000 for a new roof, or $30,000 to update the primary bath stuck in the ’80s? These costs sometimes come up, even with Toronto luxury homes. As part of negotiations, the seller may offer to foot the bill for certain repairs and expenses you deem necessary. Ask your agent what the ROI is for the seller and whether their offer to improve the home also improves your bottom line. Bring all these numbers and any changes you need to be done to the table for negotiation.
Know your limits and stick to them
Not knowing when to put your foot down is a rookie mistake that leaves countless new homebuyers in hot water. It’s easy to get caught up looking at Toronto luxury homes, fall in love with one, and negotiate far beyond what you are actually comfortable spending.
When you go into negotiation, have your top dollar in mind, and don’t move past that. You aren’t going to win by spending more than you’re comfortable with or by spending more than what the home is truly worth. Be smart; be willing to walk away from the table if the other party is simply asking for too much. Otherwise, you can end up messing yourself up in the long run. Throughout the negotiation, your agent will serve as your proverbial voice of reason. With their experience, they can even advise you how long you can expect to spend bidding on different homes given current market conditions. That way, it won’t come as a surprise if your first one or two bids aren’t accepted.
Know what they want, too
By being aware of what the sellers need before you even sit down to speak with them, you effectively gain a considerable advantage. Does the seller need to hit a specific price to break even on the property? Are they pricing aggressively low to entertain multiple offers, a common occurrence in the Toronto real estate market? Do they intend to stay in the home for two months after the sale to pack and move?
In the latter case, a good agent would tell you that it’s not always a faux pas for a seller to stay on the premises after a sale is negotiated. In a market with low inventory, the person who sells you their house might want to negotiate a rent-back or lease-back deal. During this period of time, you essentially become your seller’s landlord while they get their ducks in a row. Deals like this not only defray a portion of the home cost but also can get you on the seller’s good side early on in a negotiation.
Anticipating the seller’s priorities goes hand in hand with being over-prepared, but it’s vital to consider. You are not the only party involved in this agreement, and knowing what the other person wants out of the deal can help you find a compromise and get you into the Toronto luxury homes you’ve been dreaming of much sooner.
A positive attitude gets more done
You’ve probably seen countless reality TV shows where people are arguing or negotiating, and one side goes hard, being brutal and even rude, just to ensure they walk away with a win. Usually, that side prevails. It does not work like that in real life, and especially not when we’re talking about Toronto luxury homes.
If you go in aggressive, rude, or attempting to dominate the room, you’ll be sent packing and likely struggle to find the next Toronto real estate listing that fits your needs. If you commit to an optimistic mindset and enter the negotiations with the idea that you both can come out winning, you’ll undoubtedly get so much more out of the entire process.
Persuasion principles: Why you should know them
In 1984, Robert Cialdini wrote Influence: The Psychology of Persuasion
. Despite the nearly 40-year span since then, the book has a load of principles
that you should learn and become familiar with before stepping into any negotiations.
In short, the principles include the law of reciprocity, the law of commitment and consistency, the law of liking, the law of scarcity, the law of authority, and the law of social proof.
While they all apply, a select few stick out when handling Toronto real estate and the negotiations therein. The law of reciprocity, when boiled down, states that people feel an obligation to do something for you if you do something for them first. If you do something, no matter how small, you build that connection, making your business counterpart feel closer to you than they actually are and giving them a sense of obligation. The law of liking plays right into this. If people like you, they’ll want to do more for you. They’ll want you to win the negotiation. Get someone to like you, and they will be more likely to work with you.
Good negotiations that create win-win results will never be easy to pull off, but utilizing some of these principles and thus building a lasting rapport and connection will set you apart from other negotiators and get you where you want to be. Never push that chumminess too far, though, or you’re going to make the other party feel uncomfortable and potentially back out, leaving you once again looking at lesser Toronto luxury homes.
Never speak first
This tidbit is truly Negotiation 101, but it’s a mistake many people still make when handling any sort of deal within the Toronto real estate market. You should never, ever speak first. Even if you let it get awkward in a room, keep your hands folded and your mouth shut.
You put yourself at a significant disadvantage by opening first and offering something. Perhaps the seller had a specific price in mind, but you’ve just jumped the gun and offered something higher than what they would have been willing to take. Now you just gave them all the power, and they will undoubtedly try to push you even further to see how much they can make.
Always talk in-person
It’s imperative to handle all negotiations in person. There is a lot to say about in-person communication, and in a world so digital, it’s quite rare. Pay attention to the other person’s body language
and how they hold themselves, and work on improving your own confidence and outward appearance, too. Open arms, calm hands and limbs and making friendly eye contact are important aspects you can work on while negotiating a sale for Toronto real estate.
If you feel unsure of how to start, simply start people-watching. Sit at a cafe or restaurant and pay attention to body language, tone, and conversation. You’ll learn a lot.
Ready to negotiate?
If you’re already looking to negotiate for Toronto luxury homes, you shouldn’t be doing it alone. Reach out to Fred Renna
if you need a partner who can help get you the best Toronto real estate at the best price. Fred is a Master Certified Negotiation Expert through his time in the Real Estate Negotiation Institute, meaning he’s quite literally an expert at talking to people, making connections, and getting the absolute best deal. Fred is the person you need to call if you're at all worried about negotiation.