You have found your dream home and now it is time for the next step, submit an offer to purchase the property. My role is to draft the legal document and communicate it to the seller’s representative on your behalf. We will go over all the details with you to make sure all of your requirements are included and agreed. I will use my skills and experience as a negotiator to make sure you get the best possible deal.
Real estate laws vary widely from region to region, and it’s essential that you protect your legal interests and account for any specific contractual contingencies that are unique to your area and desired property. Some general considerations include when drafting an offer:
Legal and Contractual Obligations
In Canada, an offer commits you to legal and contractual obligations as soon as the other party has accepted it. Prior to submitting an offer, ensure you are clear on the legal obligations you are undertaking, should the offer be accepted.
Prior to writing your offer, we will assess the pros and cons of the home, review information on recent area sales, local market information and keep you informed on whether there are competitive bids which will help you determine your initial offer as well as your target price for this specific home.
With some investigation, we may also be able to assess your seller’s background and objectives for selling, which may assist you in crafting a competitive offer.
Main Elements of an Offer
Depending on whether there are multiple offers on the property the price you will offer will be either higher, lower or at the list price.
When an offer is presented we will need a deposit cheque, generally a minimum 5% of the purchase price is required. These funds must be available within 24 hours of the offer being accepted. The deposit is placed in a trust account until closing at which time you will instruct your lawyer to release the funds to the seller. You will receive any interest earned on the deposit from the listing brokerage within a week or so after closing.
These are conditions in an offer that must be satisfied before it becomes legally binding. These conditions might include “conditional on buyer obtaining a satisfactory home inspection”, “conditional on the buyer obtaining financing”, or “conditional on the buyer obtaining home insurance”.
- Inclusions and Exclusions
These might include appliances, light fixtures, window coverings and anything else the seller agrees to include with the purchase price or it may be something you will ask the seller in your offer to leave behind which the seller has excluded.
- Closing or Possession Date
This is the day in which title of the property is legally transferred to you and the transfer of funds finalized.
Two Types of Offers
• Firm Offer
A firm offer is one that is submitted with no conditions. Before you submit a firm offer you must be 100% certain you want to buy the home and you have done your due diligence with my guidance, before submitting the offer. This is critical because you cannot change your mind once the offer has been accepted by the seller.
• Conditional Offer
A conditional offer is one that is contingent on you conducting a home inspection and being satisfied with the results, getting financing or insurance or even, but not likely, on selling your home before proceeding with a firm deal.
Buying a home is one of the most important investment decisions you will make in your lifetime. As such, it makes sound financial sense to enlist the services of a qualified home inspection company to ensure your home is as solid and secure on the inside as it is on the outside.
A home inspection will determine the structural and mechanical soundness of your home. Your home inspector will identify existing and potential problem areas, suggest practical low-cost solutions, and provide estimates regarding costs for any work required. You will receive a report summarizing the findings shortly after the inspection has taken place.
Performing a home inspection is protecting both yourself and your investment, as well as buying some peace-of-mind.
Home inspection costs often range according to size, age, and location of the home. There is a list of qualified and reputable home inspectors found on my concierge service list or I can arrange for a home inspector to visit the property.
If there is an offer date on the property, then it is often advised to arrange for a home inspector to come in before you even register your offer. This enables you to be confident in making an unconditional offer if there are other offers and maintain a strong position in the offer process.
If you are not in a competitive situation with other offers, then the other option is to put a condition in the offer stating the agreement will be null and void unless you are satisfied with the inspection report. Usually you have 3-5 business days after acceptance of the offer, to get an inspection performed.
Ensure any time frames indicated in your contract are realistic, particularly if your offer is still subject to securing a mortgage loan, a situation we advise against by ensuring you secure pre-approval in advance. Increases in market activity as well as increased vigilance by lenders may mean that mortgage approval requires more time.
Now that you’ve mastered this step of the buying process, read about what still lies ahead in the next chapter How to Negotiate Successfully.