You’ve found a home that you like and you’re ready to place an offer. For most home buyers, this is the most exciting, but also the most stressful part of the process. The more informed that you are and the more that you’ve followed your needs and wants list when finding a home, the easier that this step will be. If you’re using a REALTOR® as your buyer agent, this is where they should really be able to shine in helping you to secure a fair purchase price and terms.
When it comes right down to it, your offer to the seller consists of:
A legal description of the property, so that both parties agree on exactly what is being sold, including and chattels and fixtures (furnace, appliances, drapes, etc.)
A period of time for which the offer is valid. In Ontario we say that the offer is irrevocable until _________ time and date. This is how long the Sellers have to accept the offer as written.
An offer price.
Any conditions that must be fulfilled following reaching an agreement but before the purchase is “firm.”
You and your Realtor will generally sit down together at his office or at your home to prepare the offer. You’ll start by reviewing your needs and wants and comparable properties (other listings and recent similar sales) to make sure that this is the best fit for you. Then, you’ll decide upon an offer strategy, including price, terms and conditions. Your Realtor will draft an offer to reflect this and review it with you before you sign it. Finally, your Realtor will present the offer to the Seller, either in person or via their listing agent.
Once the Seller receives your offer, they’ll have the choice to accept, reject or counter it. If they counter the offer, it’s as if they’ve written a new offer to you, irrevocable for a certain period of time. Within this time, you are generally in control of the offer and the sellers cannot accept other offers until you’ve accepted, rejected or countered the sellers’ offer to you or the irrevocable period expires.
The pace of the negotiations, the aggressiveness of either the seller or buyer and the strategies that are used are unique to each negotiation. They’re influenced by the motivations and personalities of the buyer and seller, market conditions and whether there is other interest in the property. As a buyer, it’s important to negotiate with as little emotion as possible. Choose a Realtor who’s a strong negotiator to be in your corner and who gives you all the information that you need to have a good strategy and stick to it.
Negotiation will end with either an accepted offer (Generally, with conditions) or either the Buyer or Seller will walk away from negotiations and they will end. From here, a conditional offer means that the buyers will enter the conditional period of the purchase process.
In Ottawa, multiple offers occur and I certainly have great strategies to win them, but the most common result from negotiations is a conditionally accepted offer. The most common conditions are those of inspection and financial approval by the buyer and buyer’s lender.
One final note on negotiation for first-time home buyers. One of the unique advantages that many first-time home buyers have is that they don’t have to sell their current home as a condition of purchase. This can be a great negotiation lever that can save you thousands of dollars or make your offer the winner in a multiple-buyer situation if this flexibility is helpful to the seller.
Click here to read about the next step, The Conditional Period.
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What’s the difference between a real estate agent and a REALTOR®? Visit www.crea.ca/why to find out.