What to Expect when Making an Offer
Regardless of how long you’ve been hunting for a home, all buyers have one thing in common — at some point you’re going to make an offer on a property.
Once ready, your Realtor will review comparables in the neighbourhood. This includes both recently sold properties as well as current listings. A comparative market analysis, commonly called a CMA, accurately assesses the home’s worth and will assist in determining a price that you should offer and are comfortable paying. (It does not have to be the same as the seller’s asking price.)
You will also discuss the deposit, terms and conditions, inclusions and exclusions, irrevocable period and closing or possession date.
The deposit shows your good faith and will be applied against the purchase of the property when the sale closes. The higher the deposit, the stronger the offer as the seller will perceive there is less risk that you may not close.
Terms include the total price offered and the financing details. You may arrange your own financing or ask to assume the seller’s mortgage, especially if it has an attractive interest rate.
You can decide to make a firm offer, which means you are willing to purchase the property in its present state, or you could make the offer conditional on certain things that need to be met for the deal to go through. Standard conditions include a home inspection and approval of financing; however, you can add any conditions you like. For instance, if putting in an offer to purchase a condo, you will want to include a condition related to the status certificate as it contains important information about the operational, legal and financial health of the condo corporation, as well as the status of the individual unit. Your Realtor will advise you on all clause options you may need to consider.
Inclusions and Exclusions
Your offer can be conditional on the inclusion or exclusion of certain fixtures or decorative items in the purchase price of the property, such as appliances, window coverings and light fixtures.
This is the time during which your offer is valid. If the seller doesn’t accept your offer or make a counter offer by a specified date and time, your offer expires. Irrevocable periods vary and can range from a couple hours to 72 hours, depending on the seller’s wishes, market conditions or your Realtor’s strategy.
Closing or Possession Date
Closing day is when the property title is legally transferred and the transaction of funds is finalized, unless otherwise stated. The seller will often have a preferred closing date that may be negotiable. It is typically 30 to 90 days after offer acceptance for existing homes and longer for newly constructed homes, but it can be anything that both you and the seller agree upon.
Review and Acceptance
Your Realtor will then prepare the Agreement of Purchase of Sale — your official offer to the seller — and walk you through each page of the paperwork, explaining any legal language of this binding agreement and deciphering the fine print, so you understand every aspect and are confident moving forward.
Once submitted on your behalf, the seller can accept the offer, reject it or sign back a counter offer. The latter can result in the offer going back and forth until both parties have agreed or one of you ends the negotiations. You may need to compromise on small things during this time but a quality Realtor will work to achieve what you want.