The Elements of an Offer
When you have made the decision to move forward on a property that you wish to purchase, we will draft an Agreement of Purchase and Sale, and present it to the seller. It is extremely important that all of the details, terms and conditions are specified in that offer, as it becomes a legally binding document. Whatever offer we present, it will be tailored to suit your wants and needs.
Once the offer is presented to the seller, one of three options will happen:
- He will accept the offer, and proceed to the transaction
- He will reject the offer and not give any indication of the reasons why
- He will reject the offer, but make a counter offer which outlines what the seller is willing to accept. This may include elements such as price, closing date, what is being included with the property, etc.
There are basically 7 key elements that need to included in an offer to purchase property:
This is the most critical part of any offer. We will decide on what price to offer for the property based upon local market conditions, and what you, the buyer is comfortable with. Of course the seller wants as much as possible for their property and the buyer wants to pay as little as they can get away with. That is just part of the way the game is played. However, it is not necessarily the seller or buyer which ultimately determines the fair price for the property, but the prevailing real estate market at the time.
This is not the down payment, but rather the good will deposit to show that you are serious about purchasing the property. We will advise you on the appropriate amount. This deposit will be held in trust by your realtor and will be applied in its entirety towards the eventual down payment. The deposit will also be returned to you in full should the offer to purchase be rejected.
There must be a date and time included in every offer, which specifies when the offer expires. If the offer is not countered or accepted by that date by the seller, it is no longer valid. If a counter offer is made by the seller, then a new irrevocable date and time is established for the seller to respond. This date is critical to both the buyer and seller. For the buyer, it gives a clear indication that there will be an answer one way or another within a predetermined time span, and for the seller, it means that if they are serious about selling the property they need to take steps to ensure that the buyer is mollified.
The terms contained within the offer typically includes elements such as the total price offered, financing details, closing date, right to revisit the property prior to closing, etc. There are a myriad of inclusions and exclusions to consider.
Some of the conditions that are typically included in offer are: “Subject to a Home Inspection”, “Subject to Obtaining Home Insurance”, Subject to Obtaining Financing”, Subject to Selling Your Existing Property”, etc. Unless each of the conditions are fully satisfied by a pre-specified date, then the home cannot be considered sold, or in real estate parlance “sold firm.” We will include conditions in your offer that best suit YOUR needs and not the seller’s.
INCLUSIONS AND EXCLUSIONS
Generally anything which is nailed, cemented, glued, screwed, or bolted to the property is considered a fixture, and included in the sale. In the offer, it is important to identify the items that are being included (or excluded) in the offer to purchase. Typically, items like a stove, refrigerator, dishwasher and window coverings are inclusions in an offer. Seller’s may have an emotional attachment to an item like a dining room chandelier, and want that excluded from the offer.
CLOSING DATE (DATE OF POSSESSION)
Typically, this is the day that the title of the property is legally transferred to the new owner, and the funds have been paid in full to the seller. In most cases, this is also the date whereby the current occupants have moved out of the property and the new owners can move in.