Royal LePage Videos - Home Buying Series
Episode 1: Helping You with Financing Your Home Purchase
Episode 2: Helping You Determine Your Needs & Wants
Episode 3: Helping You with Your Home Search
Episode 4: Helping You Make an Offer
Episode 5: Helping You Close Your Home Purchase
Episode 4 of our Home Buying Series provides you with an overview of how the purchase offer is made.
Watch the video and then read the relative information below!
Episode 4 of 5: Helping You Make an Offer
Purchasing
Once you've found the home you're interested in, it's time to make an offer. Deciding what to offer is one of the most difficult decisions to make. Offer too little and you stand a chance of losing the house (particularly in a seller's market). On the other hand, nobody wants to pay more for something than it's worth.
The GRACEs can help you enormously by showing you what comparable houses are selling for, helping you assess the condition of the house, and judging the type of competition you may face. Once you have decided on the price you are prepared to offer, the GRACEs will draft the offer and explain the details to you.
The GRACEs will communicate the offer, sometimes known as an Offer to Purchase (a legal document specifying the offers terms and conditions) to the seller, or the seller's representative, on your behalf.
The offer can be firm or conditional.
Firm Offer to Purchase: usually preferable to the seller, because it means that you are prepared to purchase the home without any conditions. If the offer is accepted, the home is yours.
Conditional Offer to Purchase: means that you have placed one or more conditions on the purchase, such as subject to home inspection, subject to financing, or subject to the sale of the buyer's existing home. The home is not sold until all the conditions have been met.
Making an Offer
When you're making an offer to buy a home, there are six main elements to consider:
- Price
The price you offer reflects your opinion of the value of the house and is determined by the condition of the property and local market factors. You can make any offer you like. It does not have to be the same as the seller's asking price.
- Deposit
The deposit shows your good faith and will be applied against the purchase of the home when the sale closes. Your Royal LePage Realtor can advise you on an appropriate amount - often 5% of the purchase price.
- 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
Conditions are items that must be completed or fulfilled prior to an offer being concluded. These can include subject to home inspection, subject to you obtaining financing, or subject to you selling your existing property.
- Inclusions and exclusions
Your offer may be contingent on certain items being either included or excluded in the sale. These might include appliances, fixtures, and decorative items, such as window coverings or mirrors.
- Closing or possession date
The closing date 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.
Negotiating
Once your offer to purchase has been drafted, it will be presented to the seller as soon as possible. The seller can accept your offer, reject it, or make a counter offer.
Acceptance
An accepted offer means the seller has agreed to all the terms and conditions exactly as set forth in your offer to purchase.
Rejection
A rejected offer means the seller did not agree with any of the terms and conditions set forth in your offer to purchase.
Counter offer
A counter offer means the seller agrees with some of the terms and conditions of your offer, but not all of them.
The seller then makes a counter offer. The counter offer may change the price, the closing date, or add or delete conditions.
Once you have received a counter offer you have two choices. You can accept the new terms and conditions or reject them. If you reject them, you can choose to start the whole process over again.
