What to Expect When Submitting an Offer
The terms of the offer you submit on your dream home can make all the difference in today’s high-stakes real estate market. To help you understand the process of submitting an offer, we’ve broken down the most important steps. We encourage you to get in touch with us to send you a free copy of our comprehensive home buyers’ guide to learn more about what to expect throughout the buying process.
704 Stonor Street, Summerland, BC
Mortgage Pre-Approval
It’s a good idea to meet with a lender to get pre-approved for a mortgage before submitting an offer. A pre-approval will allow you to lock in an interest rate for up to 130 days and demonstrate to the home seller that you are a reliable potential buyer.
120 Av. Brockwell, Dorval, QC
Determine the Offer Price
Your real estate agent will help you determine an appropriate offer amount. Typically, this is based on a comparative market analysis of what other similar homes in the area have recently sold for and what the demand for the home you’re interested in is likely to be.
838 Mccabe Lake Drive, Middle Sackville, NS
Prepare Your Deposit
When buying a home in a competitive market, a minimum deposit of 5% of the price of the home is required. You should consider offering a higher deposit of anywhere up to 20% if the seller is likely to be receiving multiple offers.
Scott Lake Ranch, Rural Rocky View County, AB
Firm vs. Conditional Offer
A firm offer is a guarantee that you will purchase the home, while a conditional offer outlines certain criteria that will have to be met before the sale is closed. While a firm offer may be more appealing to a seller, setting certain conditions in your offer can protect you as a buyer.
Common conditions can include:
Conditional on financing: This will allow you to back out of the deal if you cannot secure a mortgage lender.
Conditional on home inspection: This is recommended as it allows you to back out of the purchase if the professional home inspector finds any significant issues with the home related to the structure, plumbing, electric etc.
Conditional on sale of home: This allows you to ensure that you’ve found a buyer for your current home before agreeing to purchase a new home.
29 Edgehill Road, Toronto, ON
Consider Included Items
You’ll want to be as specific as possible with the terms of your offer. If you’d desire to keep any fixtures of the home – such as fridges, microwaves, washing machines, or window coverings – be sure to outline them in the included items section of your paperwork.
25769 82nd Avenue, Langley, BC
The Seller’s Response
Your offer should include a time frame during which the seller must respond to the offer. This is referred to as an irrevocable date. The seller will respond in one of three ways. In the best scenario, they may accept the offer as is, in which case they agree to all the terms and conditions you’ve outlined. The most common response is that the seller will submit a counter-offer in attempt to negotiate on certain terms or a higher price. At this point, you’ll have a chance to review the proposed changes with your real estate agent. If the market is particularly competitive or they’ve decided to go with a different buyer, they may decline your offer altogether.
This article was originally published in Sotheby’s International Realty Canada Insight The Art of Living Blog in September 2024
