Making an Offer to Purchase
Once you have found the home you would like to purchase, you need to present the vendor with an Offer to Purchase or an Agreement of Purchase and Sale. As your home is probably your biggest investment, it would be wise to work with your real estate agent and/or a lawyer/notary in preparing your offer. Remember that the Offer to Purchase or Agreement of Purchase and Sale is a legal document and should be carefully prepared.
Any offer or agreement will typically include:
- Your legal name, the name of the vendor and the legal civic address of the property.
- The purchase price offered.
- The chattels that will be included in the purchase price (for example, window coverings, appliances). Whatever items in or around the home that you think are included in the sale should be specifically stated in your offer.
- The amount of deposit.
- The closing day (date you take possession of the home) usually 30 to 60 days from the date of agreement. It can also be 90 days or longer. Generally, an Offer to Purchase obliges the purchaser to take possession of the house and property on a certain date. As of the closing date, the purchaser is responsible for taxes, utilities, repairs and maintenance.
- Request for a current land survey of the property.
- Date when the offer becomes void or invalid.
- Any other conditions that go with the offer, including property inspection and Making an Offer to Purchase
- Any other conditions that go with the offer, including property inspection and approval of mortgage financing.
The process of making an offer, receiving a counter-offer and then revising it again is not uncommon. The whole process can seem like a roller coaster ride – exciting, but stressful. It’s all part of making the deal work best for you and the vendor.
| Steps for the Offer to Purchase | ||
| You | ||
| Your real estate representative helps you prepare an Offer to Purchase. This offer should include all the details of the sale. | You may want your lawyer to look at the offer BEFORE you show it to the vendor, because it is a legally binding document. | Your real estate representative or lawyer will then present the offer to the vendor, who will accept (Situation 1), make a counteroffer (Situation 2) or reject (Situation 3). |
| Vendor | ||
| Situation 1 The vendor accepts your offer. The deal is concluded. | ||
| Situation 2 The vendor may make a counter-offer, asking for a higher price or different terms. | You sign the offer back to the vendor with a higher price than your original offer, but lower than the vendor’s | The vendor accepts this counter-offer. The deal is concluded. |
| Situation 3 The vendor may make a counteroffer, asking for a higher price or different terms. If a counter-offer is returned to you at a higher price, ensure that you know exactly how much you can afford before you start negotiating. You don’t want to get caught up in the heat of the moment with costs you can’t afford. | You reject the counteroffer and decide not to make a subsequent counter-offer. | The sale doesn’t go through and your deposit is returned |
When you make an Offer to Purchase, your real estate agent or your lawyer/notary will most likely add certain conditions to it, making it a conditional offer. This means that the contract will only become final when the conditions are met. The following three conditions are generally standard in an Offer to Purchase, especially for first-time buyers:
- A satisfactory home inspection report
- A property appraisal
- Lender approval of mortgage financing to finance the purchase
Once these requirements are met, the conditions are removed and the Offer to Purchase becomes final.
