Submitting An Offer On A Property
Friday Jun 01st, 2018
So you've done your shopping and have found a property that fits your needs. You're ready to make an offer. What do you have to consider before you put pen to paper in order to ensure you cover all the bases?
The most obvious variable in any offer to purchase a property is the price. Rather than getting caught up on the asking price, consider what the property is worth to you both as an investment and as a place to live. Talk with your realtor about market conditions; is it a buyer's or seller's market? Where do we foresee prices going in the next 12-60 months?
Depending on your appetite and the market conditions you might be able to offer less than asking price, or you might need to offer more in order to secure the property. If there are a lot of interested buyers and the seller is receiving multiple offers, you're likely going to have to pony up more cash to have the winning bid. If you're in a slow market and the property has been listed for several weeks, you're probably safe coming in slightly under asking price. Ask your realtor for advice on this front.
The Closing date is the day on which you will take physical and legal possession of your home. If you have a home of your own to sell, you will typically want your purchase closing date to be on or before the closing date of your current home so you have some time to move. And so you don't end up homeless in the interim.
A strong deposit signals to the seller that you're serious about your offer and it demonstrates your commitment to seeing the deal through. Different areas have their own customs when it comes to expected deposit amounts but they are generally in the 5-20% range.
Chattels are things like appliances, furnityre, and decorations that do not require a tool to detach from the property. If you want to keep any of those items, be sure to list them explicitly on your offer. In most of Ontario, it is customary to include appliances and light fixtures.
Offer Expiry / Irrevocable Date
Your offer will include an expiry date after which you are no longer required to honour it. Until such a time that the expiry date passes or the seller declines your offer, you are on the hook for it. How long are you willing to wait for the seller to make their decision? Keep in mind that unless you're willing to end up buying multiple properties, you cannot have more than one valid offer in play at any given time. This delay can hold you up and prevent you from making an offer on another property. Typically irrevocability lasts 24-48 hours.
Conditions are precisely what they sound like; these are caveats to your offer which, after the offer is accepted, must be satisfied in order for the deal to close. If you have not been approved for a mortgage on the specific property, if you want to have an inspection done, or if you need to sell your existing home before you can afford the next, you can include these caveats in your offer as conditions. Unless all conditions are met or waived by the buyer before their respective deadlines, the deal is considered null and void and the deposit is returned to the buyer. If you offer is accepted by the seller, the clock starts ticking for you to satisfy these conditions before the deal falls through. Save yourself the stress by being organized before submitting an offer.
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