Making an offer to buy a house
Although there are many steps between deciding to buy a home and moving in day, making an offer to purchase is a crucial one.
Once you and your realtor have found the right home that satisfies your needs, most of your wants and, best of all, fits your budget, it's time to put together the offer.
If it's the first time you've purchased a home, you probably have never seen an offer to purchase (known as the Agreement of Purchase and Sale) let alone drafted one. But don't worry because your realtor is very knowledgeable about this subject and will prepare your offer, taking into account all the factors that are important to you.
Basically, the Agreement of Purchase and Sale is a precisely worded document that sets out the terms and conditions between the buyer (you) and the seller. Once the offer is made and accepted, and after any conditions of the offer are met, the offer becomes a legally binding contract - meaning you and the seller are obligated under law to hold up your ends of the agreement and complete the transaction. For that reason, you must be sure you understand what's in the offer before you sign it.
A properly drafted offer should leave no room for interpretation. It should contain everything that is important to you about the home and the transaction. For example, if the MLS listing states that the washer and dryer are included in the sale, put that fact into the offer. Basically, if you want to be sure it's sold with the house, say so in your offer. Having a written agreement about these things now will avoid complications later.
Fortunately, realtors don't have to reinvent the wheel every time there is an offer to be drafted. Standard Agreement of Purchase and Sale forms developed by the Ontario Real Estate Association (OREA) are used by most real estate boards and contain terms common to almost every real estate transaction in the province. The wording on these forms has been thoroughly reviewed and tested through Ontario's legal system and is broadly accepted. However, your specific offer may include special conditions and wording to suit your needs.
Some of the information that will need to appear on the Agreement of Purchase and Sale includes the buyer or purchaser. If you are buying the property with a spouse or partner, each of your names should be listed exactly as you'll want them to appear on the ownership document (deed) when the property is yours. The same information will be included for the seller or vendor.
The offer will also spell out the exact legal description of the property including the postal address, lot and plan number, as well as frontage and depth dimensions. Your realtor and lawyer will make sure the property description is specific and accurate. The purchase price or the price you are offering for the house along with the amount you are submitting as a deposit will also appear on the offer.
Finally, the offer will clearly indicate any conditions that must be satisfied as well as the closing date - the date the real estate transaction is complete and you take possession of the home.
After you sign your offer, your realtor will take it to the listing broker and the seller. During the irrevocable period you've defined in your offer, the seller can accept the offer, reject it or "sign back" a counter offer. A seller who signs back a counter offer is indicating interest in your offer, but dissatisfaction with one or more of your terms.
Most often, the objection revolves around the purchase price and a seller will cross out your price and insert a higher figure. If you're not happy with the counter offer, you can cross out the seller's price and write in another figure. This process continues until both parties agree to a price, or until one of you ends the negotiation.
Making an offer to purchase requires a thorough knowledge of the real estate process along with strong negotiating skills which is why you need a realtor in your corner.
This article is provided by local realtors and the Ontario Real Estate Association (OREA) for the benefit of consumers in the real estate market.
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