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The Basics of Making an Offer

A written proposal is the foundation of a real estate transaction. Oral promises are not legally enforceable when it comes to the sale of real estate. Therefore, you need to enter into a written contract, which starts with your written agreement of purchase and sale (your offer). This offer not only specifies price, but also all the terms and conditions of the purchase. For example, if the seller offered to help with $2,000 toward your closing costs, make sure that's included in your written offer and in the final completed contract, or you won't have grounds for collecting it later.

REALTORS® have standard purchase agreements and will help you put together a written, legally binding offer that reflects the price as well as terms and conditions that are right for you. Your REALTOR® will guide you through the offer, counteroffer, negotiating and closing processes. In Nova Scotia the seller must comply with certain disclosure laws, and your REALTOR® will explain what the seller must be disclose.

If you are not working with a real estate agent, keep in mind that you must draw up a purchase offer or contract that conforms to provincial law and that incorporates all of the key items.

After the offer is drawn up and signed, it is usually presented to the seller by your real estate agent, by the seller's real estate agent, if that's a different agent, or by the two together.

 

What is in an Offer?

The offer you submit, if accepted as it stands, will become a binding sales contract. So it's important that the offer contains all the items that will serve as a "blueprint for the final sale." The offer includes items such as:

• address and the legal description of the property
• sale price
• terms: for example, all cash or subject to you obtaining a mortgage for a given amount
• Whether the property has been transferred to the land registry
• The closing date (when you can take possession)
• amount of deposit accompanying the offer
• method by which real estate taxes, rents, fuel, water bills and utilities payments are to be adjusted (prorated) between buyer and seller
• provisions about who will pay for title insurance, survey, inspections, etc.
• type of deed to be given
• other clauses, which include a chance for an attorney to review the contract, disclosure of specific environmental hazards or other specific clauses
• a provision that the buyer may make a last-minute walkthrough inspection of the property just before the closing
• a time limit (preferably short) after which the offer will expire
• conditions, which are an extremely important matter and that are discussed in detail below

Conditions - “Subject to” Clauses

If your offer says "this offer is conditional upon (or subject to) a certain event," you're saying that you will only go through with the purchase if that event occurs. Here are three common conditions contained in an offer:

• The buyer obtaining specific financing
• A satisfactory report by a home inspector
• The buyer obtaining home insurance

Negotiating Tips

You're in a strong bargaining position, that is, you look particularly welcome to a seller, if:

• you're an all-cash buyer
• you're already have a preapproved mortgage and you don't have a present house that has to be sold before you can afford to buy
• you’re able to close and take possession at a time that is especially convenient for the seller

In these circumstances, you may be able to negotiate some discount from the listed price.

On the other hand, in a "hot" seller's market, if the perfect house comes on the market, you may want to offer the list price (or more) to beat out other early offers.

It's very helpful to find out why the house is being sold and whether the seller is under pressure. Keep the following considerations in mind:

• every month a vacant house remains unsold represents considerable extra expense for the seller
• if the sellers are divorcing, they may want to sell quickly
• estate sales often yield a bargain in return for a prompt deal

The Deposit 

This is a "earnest money" that you give when making an offer on a house. A seller is understandably suspicious of a written offer that is not accompanied by a cash deposit to show "good faith." The sellers brokerage will hold the deposit in a trust account.

 

The Seller's Response to Your Offer

You will have a contract if the seller, upon receiving your written offer, accepts it as written. The offer becomes firm and the property is considered sold as soon as all of the conditions, if any, of the offer are met.

If the seller likes everything except the sale price, or the proposed closing date, or the basement pool table you want left with the property, you may receive a written counteroffer including the changes the seller prefers. You are then free to accept it or reject it. If you reject the counteroffer you may write a new offer, trying to come to a deal acceptable to both sides.  This process of offer and counteroffer can continue until an offer or counteroffer is accepted.