This is the one I want. So now what?
When you find a home you absolutely love someone else may love it too. It’s important to act quickly and make an educated offer based on a rational approach to pricing and negotiating that you and your agent have discussed. To start the process rolling, your agent will draw up an agreement that includes your offering price and other terms and contingencies. Buyers often focus on price but there are other important terms included in a real estate agreement. You can include any terms you like but remember that the more you add, the more likely the seller is to object. Here are the most common elements of an Agreement of Purchase and Sale:
PRICE – The market, the Buyer, and the Seller will determine the final price. Your agent will help you formulate an offer based on comparable listings and sales, and current market conditions.
MORTGAGE CONDITION – A mortgage condition stipulates that you will buy the home subject to obtaining a mortgage. If you cannot obtain a mortgage then the contract will be void. You will need to establish a timeframe for securing financing.
HOME INSPECTION CONDITION– A thorough inspection of the property by a licensed home inspector protects you against structural or material problems that are not detectable in a casual walk-through. Home inspections are just as important in new construction as they are in resale. Buyers can’t inspect a home that isn’t built yet; however, they can request an inspection prior to closing. In new construction an inspector will make sure that all mechanical systems are working properly and may also spot repairs that need to be added to the builder’s punch list (a list of items that need to be completed). The buyer, not the seller, is responsible for hiring and paying the inspector.
DEPOSIT– The deposit is given by the buyer to be held in the listing brokerage’s trust account and secures the contract until the closing. An initial deposit usually in the form of a cheque must be given to the seller or seller’s agent along with the offer. Upon completion of the agreement the deposit will be applied to the down payment and/or closing costs to the benefit of the Buyer. If the sale does not go through due to contingencies covered within the contract, then the deposit money typically will be returned to the buyer.
CLOSING DATE – One of the most important terms of a real estate contract is the closing date – the date when ownership changes hands. This is usually the date that the seller must vacate and the buyer may occupy the property. Flexibility on the closing date can give a buyer a big advantage over other potential buyers and can occasionally allow you to negotiate a lower price or other, more favourable terms.
In many transactions, there is a fair amount of negotiation – offers and counteroffers – before both parties are satisfied. This is one aspect of a real estate transaction in which an agent is invaluable. Not only can an agent draw upon previous experience and market knowledge to offer sound advice during a negotiation, they can also serve as a buffer between the buyer and the seller/seller’s agent. Negotiating for a home can be a highly charged and emotional process, and even the most emotional buyer will look like one cool customer behind the right agent.