How To Make An Offer On a House

Without the background knowledge, making an offer on a property can feel intimidating and even stressful. Your Realtor has the duty to guide you through every step of the process. This post is here in case they haven’t done so or if you still have lingering questions about the offer process.

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Get A Mortgage Pre-Approval

Having a full understanding of your financial position before you buy a home will help clarify a healthy budget for purchasing a property. Completing this step also shows sellers that you are a pre-qualified buyer for their home. Easing the seller’s concerns during the offer process is key. When conditions arise, sellers may begin questioning the strength of the offer.

In situations of “multiple offers,” having a Pre-approval for a mortgage also gives you an advantage over any competing offer that has a condition on financing. While we are seeing fewer properties in multiple offers, there is still a steady market for homes priced from $ 500,000 to $1,000,000, with strong buyer interest.

Getting ready to start house hunting? Read these other blog posts for more advice!

Establishing a Fair Price

Your agent will then establish what they deem to be a fair price to offer. It is important to trust your agent based on the research they have done on comparative listings, both on the market and on recently sold properties. A Comparative Market Analysis (CMA) is how agents work out a fair price in an offer scenario.

Together, you will use the information from your pre-approval to reach a fair offer that is both competitive and attractive to you in the long term. It is important to note that the kind of market we are in affects the “fair amount” to offer. For example, during the COVID Pandemic, the market was inflated due to high demand and low inventory. A market characterized by these two conditions is called a seller’s market, and the benefits are that selling is very effective, but buying can become costly, making it difficult to upsize.

A buyer’s market, on the other hand, is characterized by high inventory and mediocre demand. In a buyer’s market, investors, first-time home buyers, and families looking to upsize are breaking into an affordable market, where selection is plentiful, and offers are less competitive. Your price offering will fluctuate depending on the market we are in, as supply and demand shape a range of factors that determine your likelihood of an accepted offer.

Understanding Conditions

Terms are common in offers, and navigating them is important for buyers and sellers. A common situation in which conditions tend to be more favourable is a buyer’s market, where the supply of homes listed exceeds the number of buyers. Let’s break down what conditions are, and how conditions work together. A condition is a legal obligation that the seller or buyer has to fulfill before the deal is considered a FIRM offer.

Conditions are always associated with a conditional date, which specifies the day the condition must be fulfilled for the deal to proceed.

Here are examples of some common conditions Realtors may encourage in a given offer scenario:

Financing Condition: When a home is conditional on financing, it means that the Buyers are working to get approved for a mortgage on the home and are in the process of doing so, or are working to get the best rate by shopping around at different agencies.

Home Inspection Condition: A home inspection condition involves a home inspector, a licensed professional who performs a thorough inspection of the home to ensure that everything disclosed in the listing is accurate and reflects the property’s integrity.

If your home passes a Home Inspection, it means the inspector found no red flags.
If a home does not pass an inspection, it can lead to further negotiations over the sale terms.
If a home inspection uncovers problems that the current owners are liable for, they will have to rectify them before the closing or negotiate a fair compromise.

Sale of Buyer’s Property Condition: A sale of buyer’s property condition means that the buyer currently has their home listed for sale or conditionally sold and must follow through with the firm sale and close of their existing property before closing on the property they intend to purchase.

Submitting Your Offer

Once you have reviewed the offer with your Realtor and signed off on all of the applicable spots, your Realtor will register the offer online. Now, it’s a waiting game for the cooperating agent and their sellers to review the offer together and discuss their next steps.

At this stage, they have three options. They could choose to accept the offer, meaning they will sign back and confirm their acceptance. If they want to work with the offer, but have some proposed changes, they will counter the offer and send it back. The sellers could be unhappy with the offer, and may not sign it back or give a counter offer.

If they choose to counter your offer, you can choose whether or not you agree with the changes they have made. In many cases, the offer paperwork will go back and forth between the parties until the offer is accepted or rejected. In situations where “multiple offers” are present, buyers are often prepared to write the best offer in terms of price, conditions, and closing.

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Accepted Offer

Congratulations! Once your offer has been accepted, there are a few next steps to line up.

The first is financing. Firming up your financing is essential, as you need to ensure your mortgage is in place and that you have the funds to make the deposit on the home. From there, your Realtor will help arrange any appointments for the conditions of sale (if applicable). If there are no conditions, you can look into scheduling your final walk-throughs. Walk-throughs allow buyers to return to the home an agreed number of times to check out the space, measure furniture, scope out renovations, etc.

Your Realtor will also begin asking you about selecting a Lawyer. If the home you have purchased is closing in the next two months, they will be more antsy to have a Lawyer selected so that all the paperwork can begin processing. If closing is more than three months away, your Realtor will gradually begin reminding you of the upcoming tasks in preparation for closing.

At this time, the Administrative staff working for your agent will likely contact you to request the necessary paperwork. All clients must be processed on the internal end to ensure the transaction is complaint under RECO and in accordance with their requirements.

As closing nears, you should also remember to look into the smaller things. This could include updating your utilities, and changing your address on government IDs, with your bank, and your employer.

Moving Past the Transaction

Once your offer is accepted and your paperwork is submitted to the Lawyer, buyers enter into a waiting period between the Lawyer’s review and the closing date. As a client, you should expect your Realtor to call regularly and be readily available for any questions regarding the transaction.

This time period is a true indicator of your Realtor’s motivation to maintain a strong client relationship. Take note of how your real estate agent manages the closing on your home and how they keep you in the loop.

Find Your Dream Home in Guelph

At Capstone, we are not just salespeople; we are advisors and neighbourhood experts. This allows us to confidently guide you in your real estate goals, recommend the best spots in the neighbourhood, ways to become involved in your community, and give you access to our list of preferred contractors for renovations, wealth management, and more.