After endless trips to open houses scouring street after street for the perfect home, finally finding “the one” is nothing short of exhilarating.
However, the next order of business can be a bit tricky for home buyers, says Ron Abraham, president of the Ontario Real Estate Association.
“Once you find the home that you just know will be perfect for you and your family, many home buyers are unsure of what to do next and very anxious to get the process started and get into that dream home.”
At this point, you and your Realtor will prepare an Offer to Purchase, which is a legal document that says that you agree to buy the seller’s home (often contingent on set conditions).
“There are two types of purchase offers, a firm offer (without conditions) and a conditional offer. Firm offers are usually preferred by sellers because it means that you are willing to purchase the home without any conditions, meaning that if the offer is accepted, the home is yours,” says Abraham.
However, these days many offers are conditional offers. Common conditions include passing a home inspection, receiving financing approval and the sale of one’s existing home. The deal is not done until the conditions are met.
When you’re making an offer, here are the main elements to consider:
Price: The price that you and your Realtor put into your offer will depend on the asking price, the price of comparable homes for sale, the level of competition and the final number that you are comfortable with.
Deposit: The deposit will be applied against the purchase of the house when the sale closes. A typical deposit is around five percent.
Terms: Terms include the total price offered and the financing details. You may arrange your own financing or ask to assume the seller’s mortgage if it has a competitive interest rate.
Conditions: Conditions are items that must be completed or fulfilled prior to the closing (like a home inspection, obtaining financing, or selling your existing house).
Inclusions and exclusions: Your offer may be contingent on certain items being either included or excluded in the sale. These items can be anything from appliances to window coverings (appliances and light fixtures are usually left in the home, while sellers personal possessions and decorative items are not).
Closing or Possession Date: The closing day is generally the day the title of the property is legally transferred and the transaction of funds finalized.
“If at any time, you do not understand or are not comfortable with any of the terms in the Purchase and Sale Agreement, or what you’re committing yourself to, have your lawyer review the Agreement before signing. Once you have signed the Agreement, your Realtor will present your offer to the seller’s Realtor and you will be on your way to owning a new home,” says Abraham.