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Patience Please - Under Construction.
Data and information may be incorrect or out of date
Making An Offer.
Your Deposit Should Be Ready and easily accessed so you are able to provide a valid cheque upon acceptance of your offer, the deposit will be deducted from the total purchase price.
To help you arrive at an offering price your agent should prepare and present to you a market assessment of comparable recent sale in the same neighborhood. In a normal functioning market you would offer just below its market value assessment. At the same time you would decide on your maximum purchase price regardless of the list price. I don't suggest sharing you max price with your agent.
Things That Could Influence Your Offering Price.
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Is it occupied, or is it vacant
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How long has it been on the market. Ask your agent to pull a history report on the property which shows if the seller had it listed before and at what price, did it expire without being sold. What did they pay for the property and how long ago.
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Market trends, number of average days on market is an indicator of how fast homes are selling.
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Hints dropped by the agent.
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If the seller was there when you visited the property, was there any thing they said that would influence the offering price.
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Market conditions. If the market is Hot it's a whole new ball game. See Below! or Click Here
Once you’ve decided on the offering price you have to present a written and signed legal document to the seller. Here’s where agents can really earn their commissions, acting as facilitators, intermediaries and advisers. Your agent will draw up an offer known as an Agreement Of Purchase And Sale (you are offering to purchase and if the seller signs it back it becomes an offer of sale).
If you don’t have an agent and you choosing to work independently, you can obtain a standard offer form from a real estate lawyer or website and fill in the details. Some specific aspects of your offer include the purchase price, the deposit amount, the dates you plan to pay the balance (known as “closing”) and move in (known as “possession”), and any conditions that might void the offer should the conditions not be met.
“If you have too many conditions in the offer then you have a lot of hurdles to cross,” the offer should be subject to a home inspection and financing if the required mortgage amount is not already approved.
You should also detail the fixtures and appliances that are included in the offer so the seller doesn't change them out for cheaper ones. In the offer you should state "existing appliances". I have seen actual serial numbers of appliances detailed in the offer. (careful about offending the seller)
The seller may come back to you with a counteroffer, and you respond with an amended offer (possibly the same document, with new dates or numbers written in and initialed), until you reach terms that both sides agree on. Or...... if you don’t...... you move on.
(Be aware: if the deal falls through, your deposit can be held for up to seven business days.)
The standard real estate contract typically contains wording that cancels the deal if the title is not clear, your lawyer will do this before closing but you can check the municipal registry on your own (there may be a charge) or have your agent do it to make sure to spare yourself trouble later. Meantime, a survey or real property report should be provided by the seller, and written into the contract if the terms in the standard form don’t already address it.
Little known is the fact that until an offer is accepted, you can cancel it,” But once you waive conditions, you have a legal obligation to close and you’re on the hook for losses incurred by the seller” should you not completed the deal.
With Condominiums make sure to include a condition stating that the seller will provide you with an up to date copy of the Status Certificate for the condominium within a short time period, usually 3-5 days, and these documents are subject to review by your Lawyer for 3-5 days from time of receiving. Many buyers encounter problems post-contract with issues like legal title to parking stalls, or are surprised by special assessments levied because the minutes of the condominium board weren’t reviewed prior to purchase. Don’t waive those conditions until you’re satisfied.
Agreement of Purchase And Sale
<< Explained >>
Downloads for information purpous only
OK, so now this is where the rubber meets the road and you have to put pen to paper and fill in a price. Based on what we've gone through so far along with the suggested value of the comparative market assessment that hopefully your agent prepared and went through with you, you should have a fair idea of the properties market value (for that point in time)
If you have a good agent trust his instincts on the offering price if he's not too far apart from what you had in mind. This however is not usually the case because every buyer wants a bargain and often the thinking is to go in low. This may work sometimes on properties that are over priced in the first place and have sat on the market for a long time or have some stigma attached to it (ie:, grow-op, death). If the property is priced properly going in with a fair offering price just below the asking price is usually the best coarse to follow.
You do not want to start off on the wrong foot by insulting the seller with a low ball offer and creating a battle of wills, you're buying your future home for you and or your family not negotiating the price of a new widescreen TV. On the other side the seller is looking at their home's subjective value where many memories were experience with their family and all the extra upgrades they have made over the years and if offended will fight you tooth and nail for their price and every item, fixture, chattel in the house.
One thing that talks loudly is your deposit amount. This is the amount that is offered to the seller and only given over when you and the seller have reached a successful agreement but before the conditions are met (i.e inspection, financing etc). Make sure your agreement says "Deposit Buyer submits UPON ACCEPTANCE". If your deposit is very strong it shows that you are a serious buyer that has the resources to purchase the propriety and most of all that you will close the deal and not leave the sellers up the creek holding the bag on two properties. Remember the sellers by the closing date would have more that likely purchaser their new place and need the proceeds to close on the other end. If your deposit is week it shows just the opposite, that finances are tight for you and you may not be able to close or with such a low deposit you could just walk away from the deal.
Generally I'd say that about 5% of the purchase price is considered a reasonable healthy deposit. Deposits are usually held in the seller's Broker Trust Account pending closing. Now let me point out that in "special circumstances" you can have a bank or a lawyer hold the deposit, you would then specify this in an attached schedule in the agreement and in the deposit area of the agreement you change "Upon Acceptance" to "As Otherwise Describers In This Agreement" Remember your deposit is credited to you upon closing.
Now that's on your side of the deal. On the sellers side, from the proceeds of the funds they receive for selling their home they would have to pay their Realtor and usually it about 5% of the sales price plus GST service tax, so their broker will keep the funds they were holding (if your deposit was 5%) and send a bill for the GST. All this is done through the closing of the accounts by the lawyers, Brokers can't touch the funds held in their trust account without a statement of release from the lawyers. But still they had their fees in house all along, makes you wonder how normal commission fees and deposits came to be about the same.
After coming to a decision on your offering price and deposit the other decision to be made are:
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How long do you make your offer open to the seller. That date and time is inserted in the Irrevocability section. This is usually 24 to 48 hrs but can be longer given the circumstances.
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When do you want to take possession, this date is inserted in the Completion Date. Think about this date very carefully make sure to give time for the lawyers to get things done with no rush, we don't want any mistakes being made. Also give time for packing, getting your finances in order for closing and if you have school aged children there are timing issues that need to be addressed around their schooling but 60 to 90 days are normal.The Closing Date is often a very strong negotiating tool, your realtor needs to find out what date the sellers prefers and just how important that date is to them. Sellers will often compromise on their price to get their closing date.
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CHATTELS INCLUDED: These are items that are being sold with the property and are listed on the MLS form but you can also include any other item that you would like (look back at the notes you took when you visited) every thing can become negotiable but be careful.
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Download a copy of the Purchase Agreement I provided above and read through each item for further info.
Once you've discussed every thing with your realtor he or she will prepare the offer and go through it with you. They will have you sign and initial various sections and ask you to provide them with a deposit cheque. At this point your realtor will call the Listing Brokerage and register your valid offer with there office, they will also call the listing salesperson and inform them personally that they have an offer on their listing, at the same time they should try to get a sense of interest expresses in the property by others and most importantly if there are any other offers registered on the property and push to get a quick presentation of yours.
A face to face presentation with the seller and their agent is always best, if this can be arranged (more of a rarity now a days) your realtor will want to have you close by to quickly deal with any sign backs.
Making Offers in Hot Markets And Multiple Bidding Situations.
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Do not offer less than list price. Realize you may need to offer more than the amount the seller is asking.
Deposit consider doubling or tripling the amount. You're going to pay it anyway at closing.
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Ask your Agent to Call the Listing Agent for tips. If your agent can save the listing agent some time by preparing the offer correctly, the listing agent might be inclined to recommend your offer over an offer from another agent who did not complete the offer the way the seller expects. This could save on any unnecessary counter offers.
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If you write a good offer, a fast offer and a clean offer, your chances of acceptance are far better than those of a buyer who is unprepared.
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Write a personal letter to the sellers: It is powerful and very effective for the sellers to receive along with the offer a personal letter from the buyers telling them a bit themselves and their family and explain how they admire and love the sellers home, ect.
Should you skip the home inspection in a hot market?
In a bidding war there is usually no negotiation; buyers put forward their best and final offer. That means coming up with a number you’re prepared to pay, even if it’s over the list price. It can also mean making concessions on items like possession dates like we said and more. But being aggressive doesn’t mean abandoning common sense. If there’s no opportunity for a pre-inspection of the property, think hard and carefully about whether you’re prepared to buy the house without the advice of a professional or a finance clause if you are not yet fully approved.
Unfortunately a clean offer without conditions is what it often takes to get the attention of the seller but do so at your own risk. Get Advice. I personally wouldn't.
It's natural for emotion to come into play in the home-buying process. Buying a house is a big decision, but this is exactly why you need to ensure you are making rational choices, rather than getting wrapped up in the notion of a dream home. Slow down, overcome your emotions and, ultimately, make a home-purchase decision that's good for both your feelings and your finances.