You have found your dream home and you are ready to make an offer or, as a seller, you have received your first offer. Buying and selling can be an emotional time where both parties are trying to complete all the paperwork and processes to move into their new respective homes as quickly as possible.
Are you aware that an offer to purchase a home is a legally binding contract with implications? You may be anxious to get the keys in your hand and breeze through the process, but make sure you take the time to carefully read everything through with the support of your real estate agent and lawyer.
Here is a review of some items you may see/include in your offer.
Types of Home Purchase Offers
Firm Offer: Preferable to the seller, this offer means you are prepared to purchase the home without any conditions. If the offer is accepted, the home is yours.
Conditional Offer: This offer means you are placing one or more conditions on the purchase of the home. Common conditions may be a satisfactory home inspection, financial approval or subject to the sale of the buyer’s existing home. The house is not sold until the conditions are met.
What Appears in an Offer? The Following are a Few Main Elements to Consider:
- Names – your legal name, the legal name of the vendor, and the address of the property.
- Price – the price you are offering to pay for the home.
- Amount of Deposit – a deposit shows your good faith and will be applied against the purchase of the house when the sale closes. Your real estate agent can advise you on an appropriate amount.
- Terms – includes the total price offered and the financing details.
- Inclusions – any items in or around the home that you think are included in the sale are to be specifically stated in your offer.
- The Closing Day – the closing day is generally the day the title of the property is legally transferred and the transaction of funds finalized.
- Date the Offer Expires – after this date the offer becomes null and void — that means it is no longer valid.
- Other Conditions – conditions may include a satisfactory home inspection report, a property appraisal, or lender approval of mortgage financing.
Many offers will be conditional on a home inspection. Home inspections are conducted by a professional home inspector who will inspect the home for potential problems to the structure, plumbing, wiring and other aspects.
Sellers: hire an inspector to identify any problems with your house, you can elect to share the report with potential buyers or use it to make the necessary changes so the house will be in good condition and meet buyers’ expectations.
Buyers: hire an inspector to identify any major defects or problems with the home to make an informed decision about the condition and potential cost of repairs. The outcome of the expectation can give you leverage to change your offer.
When buying or selling a resale condo, the most important document in the deal is the status certificate. The status certificate answers important questions like: do I own the parking or locker? Are pets allowed? How much is in the reserve fund for future repairs? Who is the property manager?
Sellers: It is advisable to find out what is in the status certificate for your unit prior to listing it, so there are no surprises when an offer is made.
Buyers: Most real estate lawyers will require a current status certificate for any condo that is being purchased. They use the enclosed information to advise their clients, the buyers, if the deal is a sound one.
Submitting/accepting an offer is not a task to be taken lightly. Although the process can seem overwhelming at times, having an accomplished and educated real estate agent on your side will help you through the process and make things significantly easier.
If you are looking to buy or sell, and have any questions on home purchase offers, give me a call at 416-921-1112 and I will be happy to help!