St. John's Real Estate Market Cools A Little

According to the Senior Market Analyst with CMHC, the fourth quarter average MLS® prices in St. John's surged 27% to $193,529 compared to $152,160 during the fourth quarter of 2007, representing the only growth market in Canada.

Prices spiked in the 2008 as there were often multiple buyers for the same home leading to a bidding war which contributed to the significant rise in average prices for the year. In light of this, real estate in St. John's, NL was one of the best places to have been invested in North America in 2008.

Thus far in 2009, market demand has weakened allowing for a more moderate pace of sales. As well, inventory has began to rise and some prices which were set with the 2008 demand in mind have now started to decline. But we are a long way from the buyers market that characterized St. John's in the early 90's.

While prices are cooling off from the peak of 2008, agents that I have spoken to are expecting that we will see a return to a more "normal" market in the current year. This will allow first time home buyers an opportunity to purchase a home at a more affordable price.

Buyers who have been put off by the slowing economy worldwide will find some selection again as well as home prices that are within their reach. But the fear of buying in a slowing economy may delay the next rise in prices. Some industry experts are suggesting that a return to market growth nation wide may not occur until 2011 to 2012.

It should be remembered though that the Newfoundland market will trump any national trends if any of the major construction projects anticipated are given the go ahead. In this event, real estate prices would rise again as demand would quickly return to the 2008 levels.

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Real Estate Negotiating

In Canada, Real Estate transactions are formed as legally binding buy and sell agreements that must be negotiated by at least two parties. A Purchase and Sale agreement will have a specific buyer and seller. As a minimum, it lists the terms and conditions of the agreement, the parties involved in the transaction and the closing date.

While it is true that some folks would rather not haggle for anything, negotiating is as important to Real Estate trading as writing the cheque on closing day. But securing an agreement between two competing parties is often not as easy as said, especially if either party has had little or no negotiating experience.

By the way, negotiating with a street vendor in Mexico to buy a toy clown is inadequate preparation for the rigor of contest over a quarter million dollar home. I am familiar with negotiating with the Mexicans. Let's just say I found myself pushing a little too hard when my wife announced I was arguing over 25 cents. I learned then that you have to know when to accept the final offer.

There are a few guidelines to bear in mind before beginning the process of negotiating for the dream home that you have just found, already love and now, oh my, must have! Things often move slowly with the home buying process until one experiences the "love at first sight" factor. Let consider the basic principal of successful negotiating.

Why Do We Negotiate?

One normally negotiates to acquire something if interest. The home buyer wants the vendor's home to gain a certain utility; a nice place to live, a convenient location, prestige among friends and colleagues, a two car garage, the indulgence of an "ensuite" bath, or if you can believe it, some want a certain proximity to the mother in law. I kid you not! The needs for home grown childcare have a way of taking precedence for some men who overlook the mantra, "don't by next to your mother in law"! By the way, my own mother in law is great, in case you are ever talking to her! That's all you heard me say.

So for some utility such as these, the buyer offers to exchange a sum of money with the vendor as an attempt to trade for their home. It isn't legal for any of us to just take what we want as some did years ago. We negotiate because as a society, we believe in "fair" trade; that is where we exchange fair market value for our acquisitions.

Negotiating is based upon the principal of fair trade. We refer to it as a win/win transaction. Both parties will trade if they believe they are not being pilfered. We should not offer a ridiculous price to purchase someones home without expecting a rejection. The more ridiculous the offer, the more emphatic will be the "not interested" from our trading opponent.

If either buyer or seller comes to the table with only their wish list front and center, giving no thought to the needs and desires of the other, a successful trade will be difficult to achieve.

Failure to understand what the other party needs in the transaction will leave little room for success. I have known a few deals to go south quickly when the vendor was offended by an offer that looked more like a heist.

What happens if we try to see things from our opponent's eyes, if we ask ourselves a few questions to help us understand our opponent? What will s/he deem fair and acceptable? If negotiations are going to succeed they must reflect a deal that allows both parties to win. Trying to negotiate a one sided deal where one party gains at the other one's expense will nearly always meet with unfavourable results. These win/lose deals fail to conclude because they violate the fair trade principal.

If you want to succeed in negotiating, it will be important to remember that each party to the negotiations must gain something that they are satisfied to substitute for whatever they are asked to concede. Expectations will vary depending on time, circumstances and the skill of communications. The first thing to remember though is to think about the other side before you begin. If you can find something that is important to your opponent but of little consequence to your own interests it will aid in you success.