How to make an offer on a house
Written by Sean Cooper
Wednesday, September 14th, 2016
When it comes to home-buying, developing a list of needs and wants for the home you'd like to buy can go a long way.
Many buyers are nervous about making an offer, since a home can represent the single largest financial transaction they'll ever make. By being prepared, you'll help get rid of pre-purchase jitters and be better prepared to put forward a successful offer.
The offer is a legal document and represents a large sum of money. You'll want to have your real estate “dream team" assembled before you make the offer. Your real estate agent and lawyer will help ensure you've dotted every "I" and crossed every "T", and that the home-buying process goes smoothly. A properly prepared offer goes a long way, especially when you're buying in a hot real estate market with multiple offers.
Items typically found in the offer to purchase include:
Your legal name
The address of the property you're buying
The offer price: Buyers typically base their offer price on several factors, such as comparable properties currently listed or recently sold in the neighbourhood.
Chattels and fixtures: A chattel is something movable, such as your appliances, while a fixture is something that's attached to your home, such as the kitchen sink and light fixtures. Whether something is a chattel or a fixture isn't always black and white. You might think a kitchen island is a fixture, while the seller might think it's a chattel. To be on the safe side, list all chattels you expect to stay in the home in your offer.
Conditions: The most common conditions include home inspection and financing. Conditions help protect you as the buyer. It's important to strike a balance. In bidding wars, including too many conditions can make your offer less attractive to sellers. But on the other hand, you don't want to get so caught up in the emotions of bidding that you sacrifice your own best interests.
The closing/possession date: The date you officially take ownership of the property. Most people whose new home purchase follows the sale of a previous home want their new home purchase to close on or around their home sale. But in certain situations, closing dates may need to be a bit more spaced out. Remember to consider any additional costs associated with this, such as bridge financing and storage/rental costs.
Deposit amount: The deposit shows the seller you're serious about buying a property. The size of your deposit usually depends on the location you're buying and the property type (new or resale). Your real estate agent can help you come up with a reasonable amount.
The date the offer expires: You don't want to leave your offer on the table for too long, otherwise the seller might entertain other offers.
The seller may accept your first offer, but that doesn't always happen. If there are multiple offers, the seller might want to counteroffer, so be prepared. You may decide to sweeten your offer by upping your offer price or excluding chattels. It's usually a negotiation process.