Taking time, space to make best decision
Dear Joe: We recently purchased a home and the experience initially was an emotional roller-coaster. However, we followed your advice from past columns and I thought I would share with you how things worked out.
A property we came across had everything we wanted and was in a location we loved. But on the flip side, we would be leaving a comfortable home in which our children had grown up.
We considered several referrals from friends and family and went with a sales representative we thought was the best fit for us — one with 26 years of experience in the local market. After considering her advice and talking through our options, we decided to use three tactics to help us make a rational decision about buying the home and to stick to the plan we put in place.
First, once we set our budget, we were determined to stick to it. We knew exactly what we were able to pay and we refused to pay more, no matter how taken we were with the home. By setting our hard cap, we prevented ourselves from making a decision that could have had a harmful impact on our finances.
The second tactic we employed was giving ourselves time to think. We were fortunate to have periods of 48 hours or 72 hours to think about an offer. We used them. It helped us get over the adrenalin rush of putting in an offer on a great place. It also gave us time to come to terms with leaving a comfortable home that we had lived in for 28 years.
Finally, we weren’t afraid to walk away. After several offers and counter-offers, we finally just said “no” because we didn’t seem to be making any headway in our negotiations to get to within our budget.
Because we had time to think and because we knew exactly what we wanted to pay, it made it easier for us to get past our emotions and make that decision. Fortunately for us, 20 minutes after we told the sellers we were no longer interested, they came back with the offer we wanted. For us, it wasn’t a tactic so much as knowing where we were prepared to draw the line. Dear reader: Given that November is Financial Literacy Month, your experience is timely as it demonstrates the value of sound planning when it comes to your financial assets.
It seems that the key to your success was rooted in the strategy you developed with your real estate representative. Someone who has a lot of knowledge of, and experience in, your particular market can provide great advice at a time when emotions can get the best of you.
Knowing what you can afford to pay and what you are prepared to pay (quite often not the same thing) and resisting the urge to bid higher than your budget is certainly prudent as it gives you more financial leeway down the road for other expenses such as home inspection, moving, legal fees and other closing costs.
You also benefited from having time to think. Not all buyers have that luxury, especially in hot markets where bidding wars rule the day. But even then, if you have the option of sleeping on a counteroffer, that gives you time to process the big decision that you are making.
And, while it is never easy to walk away from a terrific opportunity, sometimes that is the smartest move for a variety of reasons. Moreover, taking advantage of that option can sometimes work in your favour, as you found out.
For those who don’t have the luxury of time to find a home, it can be very difficult to walk away, so it’s important to discuss your options and strategy with your sales representative before going after a home. You have to know and assess your options before you go house hunting, so you aren’t lured into an emotional trap.
Next week, we will be sharing the results of a new survey that shows some common concerns Ontarians have about the buying and selling process at different points in their lives. Joseph Richer is registrar of the Real Estate Council of Ontario (RECO). He oversees and enforces all rules governing real estate professionals in Ontario. Email questions to askjoe@reco.on.ca. Find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at youtube.com/RECOhelps.