Elements of an Offer Explained
When you’re making an offer to buy a home, there are six main elements to consider:
Deciding how much to offer is one of the most difficult judgments to make. Offer too little (or offer too late), and you stand the chance of losing the house to another bidder (particularly in a seller’s market). On the other hand, nobody wants to pay more for something than it’s worth. Your Royal LePage real estate agent can help you understand the local housing market by showing you what comparable homes are selling for, helping you assess the condition of the house, and determining the type of competition you may face from other buyers.
The deposit shows your good faith and will be applied against the purchase of the house when the sale closes. Your Royal LePage real estate agent can advise you on an appropriate amount (typically 5%).
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.
Conditions are items that must be completed or fulfilled prior to the closing (such as a home inspection, obtaining financing, or selling your existing house). List anything you want the seller to pay for – carpet cleaning, warranties and any repairs or credits for damages, and so on.
- Inclusions and exclusions
Your offer may be contingent on certain items being either included or excluded in the sale. These items can be anything from appliances to decorative items, such as window coverings or mirrors (these are called chattels in legalese).
- Closing day
In Canadian real estate transactions, the closing day is generally the day the title of the property is legally transferred and the transaction of funds finalized, unless otherwise specified (except in Manitoba and Quebec). In British Columbia, the possession date is legally one to three days after closing.
When the negotiations are complete and all the terms are agreed upon, your real estate agent usually prepares a copy of the agreement of purchase and sale showing only the final terms. Once this process is complete, you and your real estate lawyer (or notary in Quebec) should review the offer to see that its terms are stated exactly as you wish before you sign it.
Careful attention to detail and consideration of the seller’s point of view should result in a happy outcome: your confident stride through the front door of your new house.