Overview
For some, this is a stressful experience. After all, you
and the seller may not be able to come to an agreement and
you won't get your dream home. There are eight basic elements
to an offer and there are various offer strategies that
you may want to use during your negotiations.
When
you've found your home, you will make a formal, written
offer to purchase. This is a legally binding contract outlining
what you will give (a combination of price and terms) in
exchange for the home. Your associate will probably use
a pre-printed form covering all of the legalities and will
modify it to cover what you want to offer.
Remember,
everything is negotiable. You should ask for what you want,
but keep in mind what you're willing to give up. Your RE/MAX
associate will put everything in writing. Of course, the
more contingencies in your offer, the less attractive it
will be to the vendor. In a buyers' market, that's OK.
The
vendor may counter your contingency with an escape clause.
For example, the vendor may wish to continue showing the
house and if they receive another offer, you'll have the
option of backing out or removing your contingency.
The
Offer Can be Firm or Conditional
A firm offer means that you are prepared to purchase the
home without any conditions. If the offer is accepted, the
home is yours. Although a firm offer to purchase is usually
preferable to the seller, if you are unable to close you
will lose your deposit and may get sued. Take time to confirm
your financing and to think twice about the investment.
A
conditional offer to purchase means that you have placed
one or more conditions on the purchase, such as subject
to home inspection, financing or sale of your existing home.
The home is not sold until all the conditions have been
met.
Acceptance
of the Offer
Your offer to purchase will be presented as soon as possible.
After the seller has reviewed the offer, it may be accepted
as is, rejected, or returned with a counter offer.
The
counter-offer may be in reference to the price, the closing
date or any number of variables. The offers can go back
and forth until both parties have agreed or one ends the
negotiations.
It
is best to know your absolute upper limit before you begin
negotiations, so that in the heat of the moment you don't
end up with a home you really can't afford.
Eight
Basic Elements of an Offer
1. Basic Details
This includes the address and legal description of the property,
and the names of the vendor, purchaser and brokers involved.
2.
Price
Depending on the market conditions, your opinion of the
value of the home and the information provided by your RE/MAX
Associate, the price you offer may be different from the
seller's asking price.
3.
Chattel - Inclusions and Exclusions
Items within the home that will be included in the purchase
price such as appliances, fixtures or decorations such as
drapes or mirrors are referred to as chattel. Don't assume
that anything will be left behind. If you want it, put it
in writing.
4.
Deposit
The deposit shows your good faith and will be applied against
the purchase of the home when the sale closes. Deposits
are usually no more than 3-5% of the purchase price, but
a larger deposit can show the vendor that you're serious.
Your RE/MAX associate will advise you on the appropriate
amount, and you may wish to stipulate that some interest
be paid on it in the meantime.
5.
Terms
These include the total price of your offer as well as the
financing details. You may arrange your own financing or
may ask to assume the seller's mortgage, especially if it
has an attractive interest rate. There will also be an expiration
date and time after which the offer is no longer valid.
6.
Conditions
These might make your offer subject to home inspection,
to your obtaining financing or to your selling your property.
7.
Closing or Possession Date
Generally, the date the title of the property is legally
transferred and the transaction of funds is finalized between
30 and 90 days from the date of the offer. This is often
a good negotiating point as vendors usually have a fixed
date in mind.
8.
Request for a Current Survey of the Property
If the vendor does not have one, you may wish to make one
obtaining a land survey a condition of the closing. In most
cases, the vendor will not pay for a new survey. As discussed
earlier, you can ask the vendor to provide a "Declaration
of Possession" or you could buy a "Title Insurance"
policy instead. If however, you are planning to add to the
house or build a garage, the best idea is to request a new
survey - you'll likely need it to get your building permits.
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