When you’re buying a home, making an offer can be a make it or break it moment. Which is why as we prepare the offer, we should sit down together to cover all of the possibilities. Doing it by email or phone is less than ideal as there are numerous legal interests involved. Plus we’ll want to account for any specific contractual contingencies that are unique to your area and desired property.
Some general considerations in preparing and submitting an offer are:
Legal and Contractual Obligations
In Canada, an offer commits you to legal and contractual obligations as soon as the other party has accepted it. Prior to submitting an offer, we will ensure you are clear on the legal obligations you are undertaking, should the offer be accepted.
Prior to writing your offer, we will provide you with information on recent area sales, local market information and background on whether there are competitive bids, which will help you determine your initial offer as well as your target price for this specific home.
With some investigation, we will also be able to assess the seller’s background and objectives for selling, which may assist you in crafting a competitive offer.
The details of an offer typically include: your legal name and that of the vendor, the legal civic address of the property, the price you are offering to pay, inclusions (items in or around the home that you think are included in the sale should be specifically stated in your offer, such as appliances, lighting fixtures or window coverings), amount of your deposit, dates you take legal and physical possession of the home, legal “subjects” or “conditions” upon which the contract becomes final (such as satisfactory home inspection report or financing approval), and the date the offer expires.
Your offer is a legally binding document so it is important we take the necessary steps in preparing this document.
We can advise you as to whether a professional inspection should be conducted prior to or after submitting your offer. This will depend on the property age and type, and whether competitive bids are anticipated.
We need to ensure that any time frames indicated in your contract are realistic, particularly if your offer is still subject to securing a mortgage loan. We advise all buyers to ensure they secure pre-approval in advance. Increases in market activity as well as increased vigilance by lenders may mean that mortgage approval requires more time.
Once you finalize and submit the offer, the waiting game begins. If you’re lucky, the first offer may be accepted, or we may need to deal with a counter offer. You can learn more about the negotiation process here, and if you want regular updates on buying and selling in Vancouver, you can sign up for updates here.
Tips and Tricks for Negotiating a Deal on Your Potential Home
After submitting an offer, we should be prepared to negotiate, not just on the initial price, but on all key factors impacting the sale of the home including deposit, inclusions, dates for completion and possession, and deadlines for subject removals. We will ensure you know your budget and requirements prior to submitting your offer so you don’t commit to additional costs in the heat of the process.
In high-demand, low-inventory areas, you may find yourself bidding against other buyers. Some sellers in high- demand niche markets may also intentionally list their home at a low price hoping to stimulate multiple offers. This doesn’t necessarily mean that the price will be bid up significantly over the asking price, but it does mean that due diligence is required on your part and our part as your REALTOR® team to ensure the offer you submit is strategic, competitive and reflective of what are ultimately willing to pay for the property.
Whether you are anticipating competition or not, you should be pre-approved for your mortgage prior to your home search and well in advance of writing an offer. In a multiple offer situation, this will impact your ability to negotiate successfully, particularly if others making an offer are already pre-approved. It also lets you know the maximum you can afford in what may be a stressful situation.
You can expect one of three responses to your offer:
- Accepted as is: the deal is complete and once signed by the seller, the offer becomes a binding legal contract.
- Counter offer: the seller may make changes to your offer, such as adjustments to the price, closing date or conditions.You may accept the counteroffer and close the deal by signing the document. Or, you may make another counter offer back to the seller.
- Rejection of the offer: the seller may choose to reject the offer and the sale will not go through.
Once both parties come to an agreement, negotiations conclude and you move on to the next steps in the buying process.You will have a set period of time in which to satisfy the legal conditions (“subjects”) agreed to in your contract, such as completing a satisfactory home inspection report or securing financing. Only after your subjects/ conditions are removed do you have a legally binding document.
Closing the Deal on Your New Home in Vancouver
The closing or completion day is the day you take legal possession of your new property.
As this day nears, we will along with your lender will monitor the progress of your transaction to ensure there are no last minute issues that need to be dealt with.
Completion (Closing) Day
On completion day itself, legal property ownership is transferred to your name.The mortgage amount is provided to your lawyer or notary by your lender and you will receive a Statement of Adjustments with costs payable, including: balance owing, legal fees, property transfer taxes and other completion costs.Your lawyer or notary will pay the seller, complete necessary documents and register your home at the Land Titles Office in your name.
On your closing day, your lender provides the mortgage money to your lawyer/notary, you provide the down payment (minus your deposit) to your lawyer/notary as well as remaining closing costs.Your lawyer/notary pays the vendor, registers the home in your name and provides you the deed to your new home.