[Marcin]

My girlfriend and I are very interested in purchasing this luxury home in Oakville, Ontario and we were recently told that to entertain a viewing of this home the agent would like for us to come up with a figure that we would be prepared to offer provided we like what we see and decide to pursue the purchase. I think she's trying to make sure that we won't waste anyones time by only being able to offer half of the price.

I'm hoping that some of you with market experience and/or real estate knowledge can suggest to us what a reasonable offer would be for the home of the following statistics:

The home is approx. 6000sq.ft (lot size 70 x 736ft) luxury residence (5 bedrooms) situated in very close proximity (walking distance) to downtown Oakville. It is a very attractive home built in 1998, fully finished with lots of upgrades, nicely finished backyard with a pool fronting lake Ontario. It has been on the market for 9 months and the asking price is $4.29 million. Yearly tax: $35,000 We will not need to mortgage out the home and have the funds to pay it off in full.

We were thinking of telling the agent that right now we would be prepared to spend around $3.4 million on a home. Do you guys feel that this is an appropriate figure? We don't want to commit needlessly to an amount that's too high but at the same time we don't want the agent to not take us seriously by throwing out a number that's just much too low. Also, is it common practice for agents to talk money even before showing the residence in person? Any comments/suggestions would be greatly appreciated.

 

[urbandreamer]

What's 25% off of $4.3 million? (Expected deline in Canadian real estate prices over next year.)

Thus, $3.3-$3.4 is about right.

 

[Glen]

Marcin,

The only thing that you need to inform the agent of is that you are able to pay for the house, unconditionally. It is absurd to be expected to make what amounts to an offer, sight unseen.

 

[TrickyRicky]

I can't claim to have much knowledge of real estate purchases in the single family luxury home market but here is my point: Your agent need not ask for such information. You owe no allegiance to your agent. You are the client she works for you. Do not give your agent full disclosure of your own financial position or objectives as if you were bffs. You, having your own self-interest in mind, would not work against yourself in a business deal. She would not hesitate to work against you to satisfy her own self-interest. The only person who can tell you if your offer makes sense is you because no one else can know your objective. The price of real estate is falling. There is no floor on the price of a luxury home beyond its geographic cache. A luxury home in an established cache neighbourhood has a price floor. A palace built out in the country on a farmers field can be at one time expensive and at an other time near worthless.

 

[Marcin]

Marcin,

The only thing that you need to inform the agent of is that you are able to pay for the house, unconditionally. It is absurd to be expected to make what amounts to an offer, sight unseen.

By informing the agent, would it be enough to assure her verbally or is it standard practice that for homes of that value some form of bank record is required to satisfy her that we would qualify for a mortgage to sustain such a home or proof that we have enough funds to cover majority of its costs.

 

[gregv]

When you say the agent it is not clear to me whether you are speaking about the listing agent or the agent who is helping you find a property.

Is the listing agent only showing the property to qualified buyers or is your own agent requesting proof you can afford the homes he/she is showing you?

 

[Marcin]

Greg, yes I'm referring to the listing agent. We saw the property on a real-estate website and contacted the agent who is listing the property for the seller. When I originally spoke to her in detail, after asking some questions about us, she asked if my girlfriend and I have discussed the financial aspect of the property meaning if we have agreed on the amount we'd be willing to pay for it. I said no and she said to discuss this with my girlfriend first and once we have a general idea on figures to contact her further. So I know when I speak with her today to arrange to view the property she will ask if we've discussed the "financial" aspect. I was just inquiring what my financial commitment is to her at the time of viewing, if any. The home is not listed for qualified buyers only but to everyone, at least that's what I gathered from the website.

 

[Ken]

Very strange that the agent ask you to put an offer before seeing the home. Maybe this is the seller's request, but nothing like this for regular homes in GTA.

My suggestion is to ask the agent if you can see the home without this crap, and find another agent that can help you bypass this step.

 

[cdr108]

If the listing agent is asking about your finances, do NOT disclose it.
They work for themselves and the seller.

Since you don't have a buyer's agent, ask the listing agent if they will put it in writing that if you work with him/her, they will reduce their commission to 2.5% TOTAL instead of getting double-ended commission if they want a firm price.

Also, ask the listing agent for a COMPLETE list of comparables for 2 years in the area to give you a rough idea of what the surrounding properties sold for and valued at as a starting point.

Values have and will continue to drop in all spectrum of properties from 1st time buyers to luxury.

 

[alafleur]

If the listing agent is asking about your finances, do NOT disclose it.
They work for themselves and the seller.

Since you don't have a buyer's agent, ask the listing agent if they will put it in writing that if you work with him/her, they will reduce their commission to 2.5% TOTAL instead of getting double-ended commission if they want a firm price.

Also, ask the listing agent for a COMPLETE list of comparables for 2 years in the area to give you a rough idea of what the surrounding properties sold for and valued at as a starting point.

Values have and will continue to drop in all spectrum of properties from 1st time buyers to luxury.

Good tips from cdr108. Remember that this person has no commitment to you, they are legally obligated to protect the interests of the seller. Do not disclose anything about your personal financial situation to them as it could be used against you at the negotiating table.

The only thing I would say to cdr108's points is that there is no way they will put anything in writing that they will lower their commission to any particular % and give this to you as a buyer. They have no obligation to you, why would they do this? The commission they receive is entirely between the agent and the seller.

The underlying point and the question you have to ask yourself is, who is representing you? Who is looking out for your interests? You have 3 choices:

1) No one. Negotiate yourself and see what you can get from the seller and their agent. On a purchase as big as this, you really have to be confident that you know what you are doing and that you are getting good value for your investment.

2) The listing agent. Sign a buyer representation agreement with the listing agent. Dual representation would occur. In theory your interests are being looked out for, but in practice we all know that this is a conflict of interest and the potential for things to end badly are high.

3) Your own buyer's agent. Hiring a buyer's agent is a great way to protect yourself and your interests. This is the preferred option from a legal perspective, and a practical perspective. It's the least risky

 

[rbt]

The home is not listed for qualified buyers only but to everyone, at least that's what I gathered from the website.

Initial response was long and detailed. Frankly, you need a real-estate lawyer to:

1) Discuss your financial capacity on your behalf
2) Negotiate the purchase on your behalf
3) Possibly even setup appointments and the like.

Real-estate in Oakville at that level is a very small world. You will be talked about and all listing agents will know of you.

Get representation (legal and/or a real-estate agent with appropriate experience) before you give away something you shouldn't, if you haven't already. A 5% variation in price is rather significant at that level.

 

[Observer Walt]

I agree with a la fleur's post, particularly his point #3. Get someone to represent you, as a buyer's agent. In all fairness to that person, you would then provide him/her with a reasonable amount of evidence that you can afford a property in that price range. A letter from your bank manager with general assurances should be sufficient. Don't provide it to the listing agent for this property. It will be the job of your agent (buyer's agent) to assure the listing agent that you are financially "qualified". Also, there is no need to get into any discussion at all about price until you have seen the place.

Agents marketing properties in the upper price ranges do have a problem with wasting time on "looky-loos" who just want to see the inside of the luxury houses and have no intention or ability to buy. In all fairness to the agent, it's reasonable that they want some assurance that you are serious. That's also the reason that these properties are shown by appointment only, as opposed to an open house that might draw everyone and his dog.

I think you'll find that, once your agent assures the listing agent that you are a "qualified" buyer, the listing agent would be more than willing to set up an appointment for you.

 

[cabbagetowner]

This is an interesting strategy for the vendor, especially in these times. tell them you will pay the full price, conditional, amongst other things, the inspection/viewing. look at the property then put in a suitable offer. point is you can't give an offer without knowing what you're buying.

 

[boojiking]

$3.4 mil sounds fair based on the property taxes the city is putting the value at about that.Get a real estate professional to assist you. In todays market a CMA must be done and adjustments made based on location and finished.At about 11 years old this house probably has some outdated finishes that need to be upgraded to reflect the price point

 

[yyzer]

we were recently told that to entertain a viewing of this home the agent would like for us to come up with a figure that we would be prepared to offer provided we like what we see and decide to pursue the purchase.

This is indeed highly unusual, and an aggressive move by the listing agent...I would think that there are gentler ways of her qualifying you...

What several others have said, you would be better off hiring a buyer agent to represent you...

Also, when it comes time to make an offer, even if you have the cash, make sure the offer is conditional on financing and house inspection...Protect yourself..