You’ve done your research, been pre-approved, found the perfect condo, and you’re ready to buy. Now it’s time to make your offer. An experienced agent will work closely with you to come up with a fair offer, present it to the seller’s agent, and do any negotiations to get you a fair price.
So what is an offer?
An offer, or (more officially) an Agreement of Purchase of Sale, is a legally binding document drafted by your realtor. It states the terms and conditions under which you’d like to purchase the property, and includes:
1.The amount you want to pay
It outlines the price you’re offering as well as your deposit amount. (Once the sale closes, the deposit is due within 24 hours of acceptance and is applied against the purchase price of the condo.) If you change your mind after submitting an offer, the deposit is non-refundable.
2.Dates
There are a number of dates outlined in your offer. They include:
Irrevocable date. Also referred to as the “deadline,” this tells the seller when they have to decide if they’ve accepted your offer or not. If they don’t make that deadline, the offer is technically void and you’re free to submit another one or move on. The time period could be 24 hours or a few days, depending on the situation.
Requisition date. This is the latest date the buyer or buyer’s lawyer can search the title to look for any liens, work orders, or other encumbrances that could affect the sale. The buyer’s lawyer sends any requisitions to the seller’s lawyer.
Closing date. Also known as the completion date, this is the big day – it’s when you officially own the property and the deal is complete.
3.Conditions
These are things that have to happen before the purchase can proceed. Basically, you’re saying “My offer is valid if x, y and z happen. If they don’t, my offer is void.” (Remember, however, that in a hot market, the fewer conditions there are, the more likely your offer will be accepted. In general, sellers like a firm offer over a conditional one.)
Here are some common conditions you might see in a conditional offer:
Mortgage financing. Your offer is based on being able to get a loan to buy the condo. The condition includes a deadline for you to get financing, or else the offer is void and the full deposit will be returned. Having your mortgage sorted BEFORE you start your search is highly recommended – a pre-approval can mean the difference between getting the condo you want and losing it to someone who already has their financing in place.
Home inspection. This lets you hire an inspector to look at the interior of the unit for any issues related to heating, cooling, central vac, plumbing, wiring, appliances, fixtures and post-reno structural issues. If the inspection finds something that’s a deal-breaker, you can terminate the contract and get your deposit back.
Status certificate. This gives your lawyer a chance to review legal documents before proceeding with a firm deal. A status certificate is a snapshot of the financial and physical well-being of both the condo building and the specific unit, and includes rules and by-laws, info on utilities, the management contract as well as any past/pending lawsuits.
Inclusions and exclusions. This covers things like lighting fixtures, built-in furniture, blinds, etc. In condos, appliances are normally considered part of the property, but we recommend they be listed in the offer.
What’s a bully offer?
It’s when someone comes in before the seller’s offer date and makes an early offer. Bully offers are usually very strong (high price, few or no conditions) in the hopes of “bullying” the seller into accepting.
What happens once the offer has been created?
Step 1: Signing. You can read over it and sign once you’re satisfied. Your agent will notify the listing agent and make an appointment to present it.
Step 2: Presentation. This is where the offer is presented to the sellers and their agent. They can accept it and sign, reject it, or make a counter-offer to start negotiations.
Step 3: Negotiation. This can be a nail-biter, especially if an offer goes back and forth several times. An experienced agent will guide you and make sure you pay an appropriate price. They will keep negotiating and communicating any counter-offers until your seller either accepts one or rejects it outright.
Step 4: Acceptance. Once the seller accepts, you’ll give your realtor a deposit cheque to accompany the final signed offer. The deposit will be applied to the purchase price owing upon closing.
What happens with multiple offers in a hot market?
Multiple offers happen all the time, especially in a strong market like Toronto. Being in a bidding war can be nerve-wracking, but working with an experienced Condo Pro can help you increase your chances of putting in a winning offer. In general, if you’re flexible with your closing date, don’t have many (or any) conditions, and have a pre-approved mortgage, that’ll increase your chances.
What happens after the offer is in place?
If there are no conditions on the purchase, congrats – you’re the proud owner of a new condo! If an offer is conditional, don’t worry. Your agent and lawyers will ensure both you and the seller are fulfilling your end of the bargain on the conditions you’ve set out. Then once conditions are met, the paperwork really picks up speed and your lawyer will take over to ensure the sale closes successfully.
A good agent will keep in touch with you before, during and after closing to ensure everything is proceeding well and answer any questions you may have.