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BUYER'S OFFER GUIDE

 

So you’ve found the place for you, yay! Now the real fun begins!

 

Agreement of Purchase and Sale.

This is the main document which stipulates what you are buying, for how much, under what conditions, what is included and who is representing you in this transaction - this is The Offer. This offer is registered with the listing brokerage either on offer day (if such exists) or any day when you decide to make an offer on a property. A seller can decide to put off looking at offers until a particular date, usually a week after listing, which means that all offers will need to be registered with the listing brokerage on that offer day (except bully offers – read about them here)

 

Registering the offer.

This simply means that you are declaring that you are putting in an offer on a particular property. Yours can be the only registered offer or there may be many agents registering offers on a property (this is called a bidding war) if it is offer day/night. As a buyer, you have the right to know how many offers are registered but none of the details of any offers may be disclosed to anyone putting in an offer. The only party who can look at all the offers and the details is the seller.

 

Presenting an offer.

Presenting an offer means presenting it to the seller. Your Realtor either does this in person or through fax by sending it to the listing brokerage.  We like to present our offers in person because this gives us a chance to bring the best that our buyers have to offer to the seller’s attention. Remember, it is not always the highest offer than wins, a lot of the time it is about the terms of the offer and how it is presented. Is the seller confident in the buyers behind the offer? A good Realtor can really bring the best qualities of his buyers to the offer table.

 

Decision time.

Once the seller has the offer(s) in their hands they can do a few things

  1. Accept the offer. This is pretty straight forward; the seller accepts the offer as it is which means that they are satisfied with absolutely every detail of the presented offer. This is the best outcome but also the absolutely least likely to occur in real life since it’s mostly impossible to have two very polar parties agree on everything right away.
  2. Sign back. This is the most likely scenario and this means that the seller signs back the offer with changes that they want included in the offer. These changes could be price, closing date, conditions, percentage of deposit, etc, etc. During a bidding war, a seller usually narrows down a small number of offers that they can work with and then decides on one party who they can potentially reach an agreement with.
  3. Reject. This is when a seller refuses the offer right after seeing it. This happens in bidding wars a lot with really low ball offers or this also happens when there is only one offer and a seller gets offended by the low offering price and refuses to negotiate with the buyer. The latter is not a thought out strategy and in reality is very detrimental to the seller who just lost their only buyer whom to negotiate with. This does happen however.

Negotiating the offer.

This is the most heart wrenching time for buyers since everything is still very much up in the air and you have no idea if your offer is $100 or $70,000 away from the other offers on the table (in bidding wars). The most important thing to keep in this situation is your cool and not get all heated up about how things are going. It’s also a good idea to be close by where the offer is being presented (seller’s home, listing agent’s office) so you can easily speak with your Realtor and re-initial the document during this stressful time.

 

Deposit.

Once your offer is accepted, you are now responsible for providing a deposit in the form of a certified cheque or bank draft. This can be done either upon acceptance of the offer (which means that you have to have your certified cheque ready right there and then) or within 24 hours of acceptance of the offer. This is not your down payment mind you, this is just the deposit that you are putting on the property.

 

Offer details:

Irrevocability. A time until which the seller has to get back to the buyer with any changes. If the seller lets the irrevocable time expire, the offer is dead and the buyer can put in an offer on another property. Similarly during a sign back the seller indicates an irrevocable time until which a buyer has a chance to respond.

Conditions. Stipulations in the offer that must be fulfilled or waived by a certain time. Conditions are usually very common and include everything from financing clauses to home inspections. The conditions can either be waived or fulfilled depending on the circumstances. Once the conditions have been dealt with the offer becomes firm.

Firm offer. Either an offer that has all the condition fulfilled or an offer with no conditions which comes into effect as soon as both parties sign. 

 

More from the Toronto Realty Guide to Buying

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FINANCING

CLOSING