House Hunting In Toronto Real Estate Guide: Offer To Purchase

Buying a house in Toronto: The Online Toronto Real Estate Guide for home buyers

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PREPARING ON OFFER

LEGAL DOCUMENT

Once you have found a home that meets both your needs and your price range, you can present the vendor with an Offer to Purchase. The vendor can accept your offer, reject it or make a counteroffer. Negotiating a purchase agreement is the trickiest aspect of any real estate transaction and there is only a small line between walking away disappointed and purchasing the home of your dreams at a fair price.

The Offer to Purchase is a legally binding document. It should not be made casually. If accepted as it stands, this offer will become a binding Agreement of Purchase and Sale. Your realtor has a variety of up-to-date forms available to you and will assist you in drafting the offer.

OFFER TO PURCHASE

PRESENTING AN OFFER

Your Offer to Purchase will include basic details, such as your legal name, the name of the vendor, and the legal and civic address of the property. Other items in the Offer include such things as:

	The purchase price. In a first offer, price is negotiable, so you may want to start lower than your maximum affordable price.
	The chattels or items in the home which will be included in the purchase price. These may include window coverings, appliances, etcetera. Whatever items are in or around the home that you think are included in the sale should be specifically stated in writing in the offer.
	All financial details. The amount of deposit accompanying the offer, and how it is to be returned to you if the offer is rejected -- or kept as damages if you later back out for no good reason; any interest to be paid on the deposit and details of mortgage financing.
	Method by which real estate taxes, rents, fuel, water bills and utilities are to be adjusted (prorated) between buyer and seller.
	Provisions about who will pay for title insurance, survey, termite inspections and the like.
	The closing date. The day you take possession of the home. Usually 30 to 60 days from the date of agreement, but with some home sales, it is often 90 days or longer.
	A time limit (expiration date and time) after which the offer will expire and becomes null and void.

In addition, it is common to make a conditional offer. For example, you may make an offer that is good only on the condition that you obtain mortgage financing or that the house passes a home inspection.

Your real estate representative, if you have one, helps you prepare an Offer to Purchase. This offer should include all the details of the sale. Since the offer is a legally binding document, you may want your lawyer to look at the offer BEFORE you show it to the vendor. Next, your real estate representative will present the offer to the vendor, who will accept, reject or make a counteroffer.

The process of making an offer, receiving a counteroffer and then revising it again is not uncommon. As long as you are well prepared, the process can be exciting and rewarding, though sometimes tense. It is all part of making the deal work best for the individuals and circumstances involved.

Your offer must be made with a deposit to the vendor's lawyer or the vendor's agent. This deposit will go toward the purchase price on the closing date. Deposits are usually no more than 10% of the purchase price. A seller is understandably suspicious of a written offer that is not accompanied by a deposit to show "good faith".

Know what your absolute upper limit is before you start negotiating or you may get caught up in the action and offer more than you can afford.

NEGOTIATIONS

CONDOMINIUMS

Although the selling price of a home is quite naturally the focal point of a real estate purchase contract, there are many other factors to consider during the negotiations.

Who will pay for what? Typical costs include the broker's commission, a home inspection, title search, transfer taxes, etcetera. Sometimes, when the seller will not budge on the selling price, he might be willing to pay more of the transaction costs.

Start with a fair offer. Making an offer that is far lower than the asking price is practically guaranteed to alienate the seller. Asking and offering prices should be based on recent sales of comparable homes.

Be informed. Try to find out why the house is being sold and whether the seller is under pressure. Keep in mind that every month a vacant house remains unsold it represents considerable extra expense for the seller.

Be discreet. Never say anything to anybody unless you would be willing to have that information repeated into a seller's ear. Except for your own real estate representative who agreed in writing to represent you, you should assume everybody is working for the seller.

Ask for advice. A real estate representative knows the market and will be able to tell you everything about negotiating strategies, compromises and creative alternatives. Make sure you have one to represent you.

Ensure that the condominium is well maintained and managed and that security systems are effective. Tour the common areas and grounds and speak with other residents.

Consider the age of the building, what improvements and repairs have been done and when. Make sure there is adequate money in the condominium's reserve fund.

Make your offer conditional on receiving a Status Certificate. There may be a fee for this document but it will provide information including the development's finances and insurance, and give you an overview of the condominium corporation's affairs. Also ask to see the building's own recent inspection audit or hire an independent inspector to check the condominium's structure and its major systems. Make your offer conditional on a satisfactory report.

FIND YOUR NEW HOME WITH

CONTACT INFORMATION
		Rick McGuigan Toronto real estate sales representative Coldwell Banker Case Realty Phone: 416-696-5100 Pager: 416-461-0925
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