There are many working parts in offering to purchase or lease a commercial real estate property.
Determining the strategy you will employ in a negotiation, however, can have a big bearing on the outcome.
I just received an offer on an industrial sale listing last week.
Prior to presenting the offer, the agent representing the buyer had pushed several specific questions which we respectfully answered in a timely manner.
We did however get to the point where we had to draw a line in the sand.
If the buyer was serious, he needed to bring us a conditional offer to demonstrate that he was real.
Reasonable expectations
It was obvious when we received the offer that the buyer had either not been properly coached in negotiation or wasn’t prepared to listen.
I understand that a prospective purchaser may be looking for a deal, but if that is the case at least show strength in the terms aside from price.
In this case the price was low, the deposit was half of what it should have been and the buyer was asking for a conditional period that was twice as long as the industry norm for this type of transaction.
The seller decided not to respond with a counter-offer unless the offer was revised with more realistic terms.
Providing strength and confidence
In another instance, I recently received an excellent offer on a property in a similar price range which we have been marketing for some time.
Although the buyer required a considerable conditional period to obtain zoning compliance and put together the financing on this development project, they were willing to offer a sum close to list price and provide non-refundable deposit money.
In this second example, the buyer had researched the motivation of the seller and determined the best negotiation approach.
While the buyer had asked a ton of questions in the first example, he didn’t try to seek information that would have helped him better position his offer, to be taken seriously.
It costs virtually nothing in lost interest to provide a healthy deposit. I typically recommend five to 10 per cent of the purchase price, depending on the length of time between condition removal and closing date.
If conditions are not removed, the contract can be structured so the buyer will receive their deposit back.
Building context
Find out if there have been any other offers, and if so, how long the property had been tied up?
Do your best to determine the expectations of the seller.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
