Making an Offer
When it comes time to making an offer, there are a few things you will want to consider.
- Price – You will have to determine a purchase price. By looking at recent sales of comparable properties, you will be able to determine a price point in which to start negotiations. The price you offer is typically lower than what the seller is asking. How much lower will depend on the condition of the house including any renovations and upgrades, the location of the house, and current market conditions.
- Inclusions – Known as chattels and fixtures, these are items that will be included with the sale of the house. They could include appliances, light fixtures, mirrors, etc. Don’t assume that anything will be left behind. If you want it, put it in writing.
- Deposit – To have a sale contract, there has to be an exchange of money. The deposit is due at the time you make an offer and will be held in trust until closing by the brokerage. It will count towards the purchase price and is part of your down payment. For example, your offer is accepted on a house at the sale price of $250,000. The deposit was $5000. You now owe $245,000 for the house at the time of closing, which will be your mortgage amount. Before you make an offer on a house, make sure that your deposit is available and can be withdrawn the next day.
- Conditions – It is quite common to make your offer conditional to protect your interests. An offer may be conditional on obtaining the mortgage, having a house inspection, or maybe even selling your own home. You will usually have a few days to satisfy these conditions to make the deal firm. Each property is different and therefore so will the conditions be different.
- Closing Date – This is the date that you will take possession of the house and title will be transferred to your name. You will have to negotiate with the seller as to what this date will be.
- Insurance – You will need to obtain property insurance for your home before the closing date. If you are buying a condo, do not confuse building insurance with homeowner’s insurance. All condominium have to have their own insurance to cover all of the common areas. You still need to get insurance for the unit that you own.
Once you have submitted your offer to purchase, the seller will have 3 choices: accept it, reject it, or counter it. Typically your first offer will be countered and then you have the same 3 choices. The offer may change hands a few times before both parties are satisfied.
This is the day on which all of the legal and financial obligations set out in the offer are satisfied. Your lawyer will contact you to let you know when title has been transferred and will give you the keys to your new home, thus starting an exciting new chapter of your life! Make sure you have all the keys (the side door, the garage, the mailbox).
You may want to contact the utility companies in advance to have an easy transition of billing and services on closing day.