Making the right offer can have important ramifications. It can get you the home that you have selected on the terms that you want, and it can save you thousands of dollars.
Reviewing this chapter before you make your first offer means that you will be better prepared than the average buyer. Once your offer is made and accepted, it becomes a legally binding contract between you and the vendor. Both parties are expected to act in good faith to finalize the sale as agreed to in the offer.
Your real estate sales representative will probably prepare your offer on an Ontario Real Estate Association Agreement Of Purchase And Sale. This standard agreement has been thoroughly tested in Ontario. It meets Ontario’s legal criteria for the purchase and sale of real estate. Sometimes, local real estate boards have their own standard forms such as the Toronto Real Estate Board.
CONDITIONS OF THE OFFER
There are certain standard conditions that are included in every offer and there are specific conditions that you may want to add for your own protection.
Your offer must specify when you are prepared to close. It may be anywhere from one to three months or longer from the date of your offer. You must allow your lawyer time to complete the searches and documentation required. As a general rule, your lawyer will want 30 days to put in place all the searches, documentation and registrations that are required for the closing.
Give the vendor/seller as little time as possible to accept, reject or counteroffer. The more time the vendor/seller has to consider, the more time is allowed for another offer to be made on the property.
All the changes, modifications, additions, deletions, offers and counteroffers will be made on the original document. If a new form is introduced, the vendor/seller will want to review it carefully, which may result in more questions and more time being lost in the process.
Irrevocability Of The Offer
Your offer is irrevocable up to a specified date and time, such as 6:00 P.M., Wednesday, March 15, after which time it is null and void. The time you allow the vendor/seller to consider your offer will depend on the circumstances. Your real estate professional will assist you in deciding how long you should specify. It may be as short as a few hours or as long as 48 hours. There is no standard time period. You want this time period to be as short as possible, so that other buyers do not have time to submit offers which may be more attractive than yours.
YOUR OWN CONDITIONS
In submitting your offer, your agent may want to add conditions to protect you. These conditions could include inspection, financing and a lawyer’s review.
Your offer can be conditional on an acceptable professional inspection of the property. The inspection must be completed within a specified time period such as 3 to 5 days.
Your offer can be conditional on the securing of financing at a specified term and interest rate within a given number of days. This financing may include a vendor take back mortgage for a specified term and interest rate.
You may specify that the offer is conditional to your lawyer’s review as to form and content within a very short period of time, such as 48 hours.
Failing any of the above, the deposit will be returned and the offer would be void.
MEETING THE VENDOR/SELLER
In most cases, it is not necessary and may even be counterproductive for the buyer to meet directly with the vendor/seller. Your real estate sales representative is a professional. It is their job to work with you and with the listing real estate sales representative to get you the home at the best price on the best possible terms.
THE PROCESS OF THE OFFER
As soon as your offer is prepared and signed, your real estate sales representative will contact the listing real estate sales representative to arrange to present the offer to the listing real estate sales representative in the presence of the vendor/seller.
Within the irrevocable time period you have specified, the vendor/seller can accept the offer as is, reject it, or modify it and sign it back to you with their own irrevocable time specified.
If the offer is accepted, your real estate sales representative will arrange for all parties, including your lawyer to receive true copies of the accepted agreement.
If the offer is rejected, you may want to resubmit it at a higher price or with a different closing date. Your real estate sales representative should have a good idea as to why the vendor/seller rejected it and how you should resubmit the offer to get negotiations started.
If the offer is modified and signed back to you, it indicates that the vendor/seller is interested in proceeding with negotiations. They may have signed it back at a higher price, a different closing date, with chattels removed or added or any combination of these and other items.
You will have an irrevocable time and date by which you must respond before the vendor’s/seller’s counteroffer becomes null and void. You can then accept the counteroffer as is. In this case, the deal is done and you have a binding legal contract. You can reject the counteroffer and walk away from the deal. You can modify the counteroffer and resubmit it with a specified irrevocable time and date for its acceptance. The process of offer and counteroffer can go on any number of times until both parties agree or one party walks away from the deal.
As in any negotiations, there usually is some compromise. There will be major items that you are not prepared to compromise. There will be less important items that you can afford to compromise on to get the home.