A quick guide to making an offer on a house
Making an offer on a house? Here is what you need to know about the final step in the home buying process. Once the offer is signed, the keys are yours.
Making an offer on a house is the final goal in the home buying process. The last few steps to take before you finally become a homeowner. Once you sign the contract, the property is yours and you will be handed the keys to your new home.
Here are the steps to make an offer on a house:
1.Have your finances in order
The first step is to double check your finances. All the funds for the down payment and closing day should be ready to go.
2. Decide on your bid
When deciding how much you are willing to pay for a property, there are three good rules to follow:
Researching the market beforehand is recommended. Your offer should be based on fair market value. Use recent home sale number in the area to see what fair price looks in your neighbourhood.
Don’t forget about getting an appraiser. They will determine the property's actual value to stop you from buying an overvalued property and figure out the right amount to bid.
The final number should be the maximum number you are comfortable with. When you make the offer, give a lower number to leave room for negotiation.
3. Choose the right timing
If you find the right home, you need to act fast. Once you know your number, get ready to get the offer in writing and send it off. You never know who you might be up against and competition between buyers can drive the prices up and start a bidding war.
4. Get it in writing
The offer is formally called a purchase and sales agreement. It is a written legal contract that outlines the terms and conditions for real estate transaction. Your agent will give you a form to fill or you can get a standard offer from a real estate lawyer. The contract should include all the details of the offer such as:
The purchase price
The deposit amount with a cheque
The date of the closing day and possession date
All the items included in the purchase price (appliances, lights, fixtures, etc.)
All the conditions to the sale (home inspection, mortgage approval, title search, etc.)
The offer’s expiry date
5. Review the documents
Your real estate lawyer can review all the documents but don't depend on them.
You need to be aware of what you are getting into and avoid traps at all costs. A real estate offer is a legally binding contract. When you sign it, you are locked. There is no turning back, and any undisclosed problems will be yours to deal with. Read the purchase and sales agreement and pay attention to each section for a failsafe contract.
6. Make the offer
It's finally time to make the offer. Real estate agents will be the facilitators between you and the seller, and for any negotiations that come afterward. Normally, buyers ask sellers for a 6 to 24-hour response.
With real estate offer, both sides have to agree to the terms of the sale. If the seller disapproves of any condition, they will present a counter offer for you to consider.
7. Make the deposit
The deposit is paid once the offer is accepted. The cheque is always made to a third party like the seller's agent or lawyer. They will be ones to deposit it on closing day and deduct the amount from the purchase price.
Even if the offer has been accepted, the sale is still subject to conditions. All conditions must be met before the contract expiry date. The seller should provide a property report, the title of the house should be clear and the home inspection should reveal no surprises.
When all conditions are approved, the sale is done and the keys are yours.