If you are planning to purchase a house you always wanted, we will give you some advice on how to be successful. I have been dealing with Toronto luxury homes for over 25 years (many of them have been real dream houses!), I know how much frustrating it can be when you end up bidding against 15 or even more interested buyers. Naturally this summary is not enough for a greenhorn to become a successful buyer, but in any case it can bring you some useful tips and prevent you from spending more cash than necessary.

Get pre-qualified

Prospective clients who can get prequalified for a bank loan always have a better chance of winning the deal than applicants without a proper financial background. Don’t let the seller in doubts about your financing. Without this, all the following tips are useless.

Get to know what or who the seller wants

It is always good if you know the details about the vendor's requirements concerning the prospective buyer, as it can save you some time going after an offer where you are not able to meet the requirements. So we strongly recommend you to get all the detailed information before you present your proposal. If the details are not acceptable for you, it is advised to try another offer instead. If the demands are such that you can meet them, work with your agent on a brief summary that will go together with your proposal. This summary gives the vendor some knowledge about you and focuses on your proposal's pluses.

Not too low, not too high

If you were the seller, of course you would be insulted if someone offered a too low price for your house, and then probably you would choose another applicant. So you want to be cautious about this. And that's even if you deliver a better offer in a later stage. Thus the best way is to offer approximately $1,800 to $4,800 more than the highest estimated proposal. Let's say the highest bid is thought to be $470,000. Adjust it to to $473,164 - don’t limit yourself to an even number!

Down payment

The usual, best looking amount of the deposit is between 10% and 20%. Later it is often possible to talk about the definitive down payment amount with the seller again, after you have closed the deal. The crucial point is that you actually pay the deposit after you sign the contract, otherwise you wouldn't seem to be a respectable buyer.

Earnest money deposit

The next practise is quite aggressive but has some great results. Try to make the earnest money deposit as big a part of the down payment as possible (this deposit is not returnable if you back out later). You have to pay this money anyway, as the earnest money deposit is included in the down payment, but it sends a strong signal to the seller. That way the seller knows you really mean to do business. After closing the deal, you can usually rearrange the down payment value, so what matters here is the earnest money deposit, showing how interested you really are in the property.

Offer free post-occupancy

In your letter of proposal, it is a good idea to mention an idea that the original owner may stay in the house for a short time after it has been sold, in case they need it for some reason. This might be the final aspect that plays for you to win the deal, as in a different situation the seller would have to pay some rent, being no longer the owner of the house.