Transactions can entail a considerable amount of negotiation between the initial offer presentation and the final sale.
The Realtor’s objectivity, experience, counsel, and professional demeanor are indispensable in these situations. Price is not the only negotiable item in the sale of a home. Potential buyers can place their choice of terms in the offer. A seller can accept the offer as is, decline the offer outright, or make a counteroffer. Your Realtor will guide you through this process.
KEY ELEMENTS OF THE OFFER TO REVIEW
Your Realtor is your negotiation partner and should provide you with background and understanding of the following aspects of the offer:
BUYER COVENANT
Who is the buyer? Is the buyer qualified to buy your home and what is their capacity to complete the deal? These are very important questions that your Realtor should be determining and then discussing all findings with you. You need to make sure that the buyer will actually be able to close the transaction on the date set for completion.
PRICE
Your Realtor’s intimate knowledge of the current market is invaluable in helping you to decide whether to accept the price the buyer is offering or to counter with a higher one. Price and completion date often play a role together in the negotiations.
MORTGAGE CONDITION
Many buyers arrive pre-qualified at the negotiating table, however many mortgage lenders place a requirement on the buyer’s pre-qualification approval that the house they end up buying must be appraised. Some buyers have not been qualified and need this condition in order to have the time to get the bank to approve their mortgage.
HOME INSPECTION CONDITION
Inspection conditions are frequently contained in offers in Toronto. Usually the conditions give buyers a few days to have the property inspected by a licensed home inspector to identify potential structural or material problems and help the buyer budget for future repairs. If the inspector uncovers any major issues then you and the buyer must negotiate what, if any, issues will be addressed and who will pay for them. Negotiations subsequent to the home inspection are usually undertaken only for items or issues of a substantial nature.
DEPOSIT
Although deposits are not mandated by Ontario law to be a specific amount, in Toronto they typically are quite substantial. They are considered to be an indication of good faith and strong buyer covenant. An amount equal to five percent of the purchase price is considered a good deposit. The deposit money does not immediately go to the seller but it is placed in the real estate brokerage’s Real Estate Trust Account and held there pending completion of the transaction at which time it gets credited to the buyer.
COMPLETION DATE (ALSO KNOWN AS CLOSING DATE)
This is the date when ownership of the house changes hands and typically the date that the seller vacates and the buyer takes possession of the property. If an offer gets presented that accommodates your particular closing date requirements it might be an important factor in deciding to negotiate or accept that offer.
