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There’s no better feeling than finding that one house from your dreams. The one that checks all the boxes. The one that makes you feel like this is home. Making an offer on a house is a process that any homebuyer will have to go through. For those who are new, it can be confusing to know where to start, but don’t worry! In this blog post, we tell you need to know about how to make an offer on a house.
How to Make an Offer: Working with Your REALTOR®
If you’re nervous on how to make an offer on a house, don’t be! If you’re working with real estate agents such as John Guliker or William Vis, they’ll be there to guide you through the entire process. However, the more you know, the more you’ll be able to prepare ahead of time and the smoother the process will be overall. If you’re unsure about anything in the process, they should be able to share their knowledge.
How to Make an Offer: Paperwork
When you’re ready to make an offer on a house, talk to your realtor and they will draw up the necessary paperwork. According to the Canada Mortgage & Housing Corporation (CMHC), your offer documentation must include specific details in order to be valid. These include:
· Your legal name, the name of the seller, and the address of the property
· The amount you’re offering to pay (purchase price) and the amount of your deposit
· Inclusions and exclusions (ex: are window blinds included in the purchase?)
· The date you want to take possession
· Request for a current land survey
· The date the offer expires
· Any conditions that must be met before the deal is finalized (ex: home inspection)
How to Make an Offer: Price
Be prepared to negotiate when making an offer on a house. This will depend on a few factors, including the current market conditions in the neighbourhood. If a neighbourhood is out of the way or is not close to many amenities, you may decide to make a lower offer to offset these disadvantages. However, be aware that this may not work in a seller’s market. Ask your realtor for any suggestions or advice before you decide to go well below asking price. Your realtor may have more ideas on the demand for homes in the area, housing inventory, and the number of days the property has been on the market.
How to Make an Offer: Down Payment
For most Canadians, buying a house also means having to secure financing. In Canada, the minimum down payment is five percent of the property price. Generally, it’s a good idea to get pre-approved for a mortgage so you know exactly what you are approved for. If you want to through the buying process quickly, securing financing can help make things run more smoothly. By showing the seller that you have the financial backing to complete the sale, they are also reassured that you will not back out of the purchase due to a lack of funding.
How to Make an Offer: Deposit
Not to be confused with a down payment, a deposit is a lump sum that goes toward your down payment. A deposit is required when you write an offer to purchase a property, but doesn’t immediately go to the seller. By making a deposit, this shows the seller that you are serious about buying the property. However, if you decide to walk away from the deal, keep in mind that you will forfeit your deposit.
The amount in a deposit will typically vary based on the type of property and how much you want the home. A deposit is typically handled differently based on the province, but typically it’s given to the seller’s real estate agent and held in trust until the deal is firm.
How to Make an Offer: Knowing Your Offer Type
During negotiations, your offer can be firm or conditional. A firm offer means that it has no conditions attached to it. This is common in a seller’s market or when there is higher demand for property. On the other hand, a conditional offer means that certain terms must be met in order for the offer to be valid. Common terms or conditions include:
· Purchase conditional on financing: requires the sign-off from a mortgage lender in order for the deal to go through. This is a common condition for first-time homebuyers. The buyer has a few days to get this, and if a lender does not agree to finance the property, the offer becomes null and void.
· Purchase conditional on home inspection: a professional home inspector will look at things in and around the home that are openly visible, such as the structure, roof, plumbing, heating, and electrical systems to ensure that the house is in good condition. If the home doesn’t pass inspection, the buyer can return to the seller and request repairs, a reduction in price, or can back out of the offer entirely.
How to Make an Offer: Negotiation
Earlier in this blog post, we talked about negotiating about price. But negotiation doesn’t have to stop there! You can also try to negotiate for more favourable terms as part of the purchase agreement. This can include asking the seller to pay for repairs or a longer/shorter closing date.
Depending on the market conditions, what you can realistically negotiate may change. By consulting with an experienced real estate agent like John Guliker or William Vis, they’ll be able to give you advice on what might be successful. In a buyer’s market, a seller may be more willing to negotiate as they know that you have other options. However, in a seller’s market, a quick and strong offer are more likely to work in your favour.
How to Make an Offer: Legal Paperwork
An offer is a legal document. It’s important to make sure that you have read and understood everything outlined in the paperwork. If you have a real estate lawyer, have them take a look through it as well. You can also ask them to go through the terms with you to make sure that you are understanding everything correctly.
Looking for a good real estate lawyer? GulikerVis can help! As experienced REALTORS® who know and love Lethbridge, the GulikerVis team knows not only the communities but the people too. If you’re looking for a real estate agent who can teach, help, or guide you through the entire buying process, the team at GulikerVis is here to help. Have a question? Talk to us today!
