After you have found the home you want to buy, you need to give the seller an Offer to Purchase (often called an Agreement of Purchase and Sale). It is very helpful to work with a realtor (and/or a lawyer/notary) to prepare your offer. The Offer to Purchase is a legal document and should be carefully prepared.
Before every offer is written I will go over all the comparable homes in the area to make sure you aren’t paying too much!
These items are typically included:
Your legal name, the name of the vendor and the legal civic address of the property.
The price you are offering to pay.
- Things included
Any items in or around the home that you think are included in the sale should be specifically stated in your offer. Some examples might be window coverings and appliances.
- Amount of your deposit
- The closing day
The closing day is the date you take possession of the home. It is usually 30 – 60 days after the date of agreement. But, it can be 90 days, or even longer.
- Request for a current land survey of the property
- Date the offer expires
After this date the offer becomes null and void — that means it’s no longer valid.
- Other conditions
Other conditions may include a satisfactory home inspection report, a property appraisal, and pre-approval of mortgage financing. This means that the contract will become final only when the conditions are met.
The Acceptance Process-What Happens After You Make an Offer to Purchase?
Imagine that your realtor has helped you prepare an Offer to Purchase. This offer includes all the details of the sale. To be extra cautious (since you know an Offer to Purchase is legally binding) you may wan to ask your lawyer to look at it before showing it to the vendor. The realtor presents the offer to the vendor. What can you expect to happen next? There are three possible responses.
- Response 1
The vendor accepts your offer. The deal is concluded and you move on to the next steps in the buying process.
- Response 2
The vendor makes a counter-offer. The counter-offer might ask for a higher price, or different terms. You can sign the offer back to the vendor, offering a higher price than your original offer, but lower than the vendor’s counter-offer. If the vender accepts this counter-offer, the deal is concluded.
- Response 3
The vendor makes a counter-offer, asking for a higher price or different terms. If a counter-offer is returned to you at a higher price, ensure that you know exactly how much you can afford before you start negotiating. You don’t want to get caught up in the heat of the moment with costs you can’t afford. You reject the counter-offer because the price is still too high, or you can’t agree to the conditions. The sale doesn’t go through, and your deposit is returned.
In certain market conditions, consumers may find that more than one buyer is interested in a property. This is a competing offer situation and creates unique conditions in a real estate transaction. Both sellers and buyers need to consider how to respond when presented with a competing offer situation. Working closely with your real estate broker or salesperson will ensure that you understand the process.
In Ontario, the seller’s real estate broker or salesperson is required to disclose the number of competing offers to all buyers who have submitted a written offer. However, the terms and conditions of each offer are confidential to the seller and their broker or salesperson.
Working with a Real Estate Broker or Salesperson
The seller’s real estate broker or salesperson represents the interests of the seller in the transaction. The decisions about how offers are presented and responded to, as well as which offer is accepted, are made by the seller.
The buyer’s real estate broker or salesperson represents the interests of the buyer in the transaction. The buyer makes the final decisions related to their offer, including the important decision of whether or not they want to participate in a competing offer situation.
In some situations, the real estate broker or will represent the interests of both seller and buyer or multiple buyers. Consumers should seek guidance from their real estate broker or salesperson if this situation arises.
Tips for Buyers
In a competing offer situation, buyers may be tempted to offer more for the property than they planned to and/or remove conditions from offers that are intended to protect them.
Before participating in a competing offer situation, buyers should consider factors such as:
How much can the buyer afford to offer for the property and how much is the property worth? A high offer could enhance the buyer’s chance of success. However, it may not be the best long-term financial decision for the buyer. A competing offer situation does not necessarily mean that a property will sell for more than the asking price. Similarly, an offer that meets or exceeds the asking price will not guarantee that a buyer’s offer is accepted.
Buyers should be aware that pre-qualifying for a mortgage does not safely eliminate the need for a financing condition in an offer. Although a buyer may be pre-qualified, a house may not appraise at the amount offered. The Buyer would have to come up with the balance of the difference between the bank will finance and the price paid for the home.
Closing day is the day when you finally take legal possession and get to call the house your home. The final signing usually happens at the lawyer or notary’s office.
These are the things that happen on closing day:
- Your lender will give the mortgage money to your lawyer/notary.
- You must give the down payment (minus the deposit) to your lawyer/notary. You must also give the remaining closing costs.
- Your lawyer/notary the bank gives the lawyer the balance of money to close
- Your lawyer forwards the funds to the seller ‘s lawyer
- Title is transferred to the buyer and the lawyer releases the keys to the buyer.
Changing the Locks
When you move into your new home you’ll want to change the exterior door locks for security. After all, you want only the people you choose to have the key to your new home. You can change the locks yourself or call a locksmith to do the job.
Both your old home and your new home should be given a thorough cleaning at moving time. Whether you’re buying cleaning supplies and doing it yourself, or hiring someone to clean for you, the costs can really add up. Plan for this expense.
You might want to re-paint, replace some light fixtures, refinish the floor, re-carpet, or do any number of other decorating tasks. Plan your budget, and consider postponing some projects for a period of time.
If your offer to purchase didn’t include appliances, and if you don’t have your own, you will have to buy them when you move into your new home. Some appliances might have installation charges.
Tools and Equipment
When you own your own home, you can no longer call the landlord to do repairs. You’ll need to own some basic hand tools and possibly some gardening and snow clearing equipment.