Buyers - Making The Offer
The Offer Process
When you are ready to make an Offer, Vivienne will provide current market information to help you decide what to offer as your starting price. The Offer will then be drafted with all the standard clauses and any custom clauses needed to protect your interests. Once the Offer is signed Vivienne will let the Listing Agent know that there is a signed Offer on the property and he will arrange for the Sellers to see it as soon as possible.
Usually the Seller, the Listing Agent and the Buyer's Agent will meet at the Seller's home or Listing Agent's office and discuss the Offer. On occasion this is not possible in which case the Offer will be faxed to the Listing Agent and all counter Offers and sign backs will be done by fax.
The Seller has three options: accept the Offer as is; reject it outright; submit a Counter Offer. The last option is the one most often used. The Counter Offer may be in reference to the price, the closing date or any other variables. The Offer goes back and forth until both parties have reached an agreement or until one of you ends negotiations. Since the process can be time consuming it is preferable for you to remain close by and therefore shorten the time spent between sign backs. The Seller can consider other Offers any time the offer has changes on it made by you; it is therefore preferable to complete negotiations as quickly as possible.
Sometimes there is more than one Offer on a property coming in at the same time, ("Multiple Offers") and this changes the Offer making procedure. The Seller will see all Offers and make his decision about what he wants to do. The Seller has two options: send all the agents away to try to get better Offers from their clients; choose one Offer to work with and reject all the Others. If the latter is chosen then negotiations proceed in the same way as if there had been only a single Offer. Always offer your best price if you are competing against other Offers; you will probably only have one chance to be chosen. Try to give the sellers the closing they are asking for, do not ask for chattels that are not included on the listing. Doing these things will give you a good chance, but remember nothing is guaranteed. In some areas houses sometimes sell for thousands above asking price when there are multiple offers. Make up your mind what the house is worth to you and don't get caught up in a bidding frenzy. Never compromise your situation by taking out conditions that are included for you protection unless you are sure it is safe to do so. Financing and home inspection conditions are in most offers and they are there to protect YOU.
Most Offers will have conditions which are placed there to protect the Buyer, or much less often the Seller. The most often used are conditions that allow the Buyer time to arrange their financing or to have the home inspected by a qualified home inspector. Less often but still quite common is the condition on the sale of the Buyer's property. The first two will almost always be present.
A typical Seller's condition might allow the Seller a period of time to find another property or to firm up an existing offer on another property.
Conditions can be included to cover any circumstance and anything is acceptable as long as both Seller and Buyer agree.
If the conditions are satisfied within the allotted time, the Offer becomes firm and binding. If not, the deal is terminated and the deposit is returned to the Buyer. When you are ready to remove the conditions, your agent will prepare waivers for you to sign. The waivers must be signed and delivered before the condition period expires or the deal becomes null and void.
As a Seller, if there is an outstanding condition for a long period of time, such as the sale of the Buyer's property, make sure there is an escape clause included in the Pffer. An escape clause allows the Seller to look at and consider other Offers. In the event he finds another Offer acceptable to him, he may then ask the Buyer to either firm up the deal or release him to accept the other Offer.
Deposits serve two purposes, part payment of the purchase price, and part assurance that the buyer will close the deal. Usually, a cheque accompanies the Offer.
Once the Offer is accepted by both parties, the cheque will be deposited into the listing broker's trust account. Some Brokers will certify the cheque before depositing it.
Buyers like to pay the smallest amount possible, while Sellers like to see the largest amount possible to give them the feeling of added security and good faith. A typical deposit might be between 3% and 5% of the purchase price.
Sellers will receive interest on the deposit but only if there is a clause in the offer specifying that interest will be paid. Make sure your agent puts the appropriate clause in the offer.
There are three criteria that must be met in order for the buyer to get interest on the deposit.
- The deposit amount must be at least $5,000,
- Closing at least 30 days away and
- The Buyer must provide his or her Social Insurance Number since the interest earned is taxable.
If the criteria are met the deposit will be put into an interest bearing trust account or term deposit and on closing the interest will be paid to the Buyer.
Chattels and Fixtures
Chattels are items of personal property in a home, although they might be connected by pipes and wires. Examples are: refrigerator, stove, washer, dryer.
Fixtures are items that have been attached to the property, becoming part of the home itself.
Examples are: built-in shelving, broadloom and light fixtures. Some items fall into a grey area; how do you classify an electronic garage door opener and the remotes to control it? A central vac system and its accessories.
In an Offer, Buyers must list which chattels the seller will leave behind, while Sellers must state which fixtures they can remove. Whether you are a Buyer or Seller - leave nothing to chance. Clearly state in the Offer if a particular item stays with the house or goes with the Seller because a mistake classifying chattels and fixtures can prove very costly.