How to make an offer on a new condo?

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InvestorNewb
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How to make an offer on a new condo?

Post by InvestorNewb »

Hello,

I found a 1-bedroom condo for sale for 392k. It is currently in development and will be ready by next year - although my guess is that it will be delayed by a year. From the brochure, it appears to have a nice view of some water and the city - including key landmarks. It's on a penthouse level floor (21) with a 641 s.f. interior and 58 s.f. balcony.

After checking out 4 new condo developments in the area, I'm considering putting in an offer. I'm just wondering how much room I can negotiate during the pre-development phase. The builders have already sold 65% of the units, which means their costs have been met and they have started construction. Is this good/bad for me?

I don't really know anything about negotiating the price of a condo. If I offer 350k, does this seem like a reasonable offer? I don't want to pay much more than that. If they only budge a little bit on the price I will probably back away. Also, how does someone even put in an offer - is this done via a formal letter or should it be done in person?

(p.s. I posted the message above on Bogleheads.org, but I am posting it here at the suggestion of one of the mods - since I am in Canada.)

Thanks
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Re: How to make an offer on a new condo?

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To make an offer, get a real estate agent to put one together for you. When shopping for property, I always use an agent to sort through the listings, make the appointments to view, show me the properties and prepare offers. It doesn't cost anything to have an agent working on behalf of the buyer. The seller's agent and the buyer's agent split the commission which is paid by the seller.

Personally, I wouldn't buy real estate that only exists on paper.
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Re: How to make an offer on a new condo?

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InvestorNewb wrote:I found a 1-bedroom condo for sale for 392k.

[...]

I don't really know anything about negotiating the price of a condo. If I offer 350k, does this seem like a reasonable offer?
In a word: "no".
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Re: How to make an offer on a new condo?

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A developer risks the wrath of all those that purchased already if he discounts the price. He might be willing to throw in a few uogrades near the end of the project, e.g. 80% sold or more.
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Re: How to make an offer on a new condo?

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AltaRed wrote:A developer risks the wrath of all those that purchased already if he discounts the price. He might be willing to throw in a few uogrades near the end of the project, e.g. 80% sold or more.
Expect a few thousands in upgrades, at best. Offering $42k less than asking will get you nowhere.
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Re: How to make an offer on a new condo?

Post by InvestorNewb »

I thought it was pretty customary to negotiate the cost down...

There is another condo in the area that is giving away free parking spots for a limited time (for new buyers). These are normally priced at $35,000.
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Re: How to make an offer on a new condo?

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InvestorNewb wrote:There is another condo in the area that is giving away free parking spots for a limited time (for new buyers). These are normally priced at $35,000.
The devil is in the details. Do you know all the specifics?
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Re: How to make an offer on a new condo?

Post by InvestorNewb »

AltaRed wrote:
InvestorNewb wrote:There is another condo in the area that is giving away free parking spots for a limited time (for new buyers). These are normally priced at $35,000.
The devil is in the details. Do you know all the specifics?
I don't know the specifics of that offer except that I received an email stating this... it might be possible that there is more to it.

I will be meeting with someone this weekend about the unit that I am interested in to learn more about it.
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Re: How to make an offer on a new condo?

Post by InvestorNewb »

They came down to 370k... although I'm still debating about it.

I'm mostly leaning against it because it's still quite high for a 1-bedroom.
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Re: How to make an offer on a new condo?

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Be sure to follow
http://www.greaterfool.ca/2013/06/14/suck-it-up/
There is a lot of information if you dig through the old stuff.
Garth may be wrong on whether there will be a soft or hard landing but at least you will be aware of potential decline if you read the site.
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Re: How to make an offer on a new condo?

Post by Insomniac »

Here's something that may be of interest to the OP. A deal is a deal - you can't get out if the market falls...

http://www.cbc.ca/news/canada/british-c ... uverl.html

Ouch!
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Re: How to make an offer on a new condo?

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It seems pretty clear this was a speculative purchase on the buyer's part. I have no sympathy for speculators/flippers that screw up the RE market at the expense of honest and sincere principal residence owners/occupiers.
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Re: How to make an offer on a new condo?

Post by kcowan »

$3 million for a box of air in the sky? Finally the insanity is coming to an end...
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Re: How to make an offer on a new condo?

Post by Insomniac »

I was trying to pointing out that the buyer should be cautious before buying something that doesn't exist or is incomplete. Maybe this link highlights it better:

http://www.cbc.ca/news/canada/british-c ... suits.html
"The most common call I get these days is, 'How do I get out of the contract?' " said Vancouver real estate lawyer Ken Pazder.

Most presale contracts are carefully designed to protect the developer, he said.
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Re: How to make an offer on a new condo?

Post by PF4FR »

As for a car!
You are allowed to!
That is becoming the norm:

http://www.theglobeandmail.com/life/hom ... e13031429/
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