MAKE BUYING OR SELLING YOUR NEXT HOME A FUN EXPERIENCE (Series Part 5) IN BRAMPTON ONTARIO
We have done a series of articles on "Make Buying or Selling Your Next Home a Fun Experience" and for your convenience you may follow the links below:
Make Buying or Selling Your Next Home a Fun Experience (Part 1)
Make Buying or Selling Your Next Home a Fun Experience (Part 2)
Make Buying or Selling Your Next Home a Fun Experience (Part 3)
Make Buying or Selling Your Next Home a Fun Experience (Part 4)
Make Buying or Selling Your Next Home a Fun Experience (Part 5)
Make Buying or Selling Your Next Home a Fun Experience (Part 6)
Make Buying or Selling Your Next Home a Fun Experience (Part 7)
You Got ‘THE' Call, WHOO-HOO!...an Offer on the Property! YEAH!
You're excited the Agents are on their way over. ‘Wow', your thinking, "we're actually moving"! Whoa, wait a second, before your guests arrive let's make sure you are aware of how the offer is going to be conducted and what is your role in this next very important step.
First and foremost, this is a business decision, that's why Uncle Bart and neighbour Sue are not representing you. Remember the lesson back in Series Two? Rely on your Agent, follow their lead and listen to their advice.
Never let your emotions rule over this decision. If the offer comes in at a lower price then you were expecting, no need to be insulted. This is just business and part of the negotiating. Don't get mad at this Buyer for trying his low offer, think about all those Buyers that came through your property and didn't do anything! It shouldn't concern you where the Buyer chose to start the negotiating, but consider where they expect to finish.
Alright, let's take a look at exactly what you will be negotiating.
With most offers there are four parts that are the usually debated at length, we call them "The Four 'C's". The Cash, the Conditions, the Chattels (basically means, your stuff!)and the Closing date.
The cash and closing date (the moving date), will be individual to you and the Buyer. By conditions, we mean your property will be sold once the offer is accepted, provided these conditions have all been met.
Here we will explain a few of the common conditions you will be asked to consider.
Condition on the Buyer arranging financing. When a Buyer decides to buy a property they go to a financial institution to be pre-qualified. Based on the Buyer's income and loans, the financial institutions give them the amount of mortgage they qualify to carry. This is a prequalification only. Once the Buyer has an accepted offer, then the Bank will confirm their incomes and loans and approve the Buyers mortgage. This is a normal clause and usually the condition is for five to seven banking days.
Condition on Property Inspection. Pretty much all of the offers today contain this condition. What the Buyer is asking here is for time for them to hire a qualified home inspector who will come into your property for a few hours to check things out. Some of the things the inspector will be looking for and will check are the projected life of the roof shingles, furnace, windows, plumbing, and the condition of the electrical wiring. It is customary for this condition to run simultaneously with the condition on financing as most Buyers will want their financing in place before they spend money on the home inspector.
Condition on arranging Home Insurance. It is now becoming quite common to see this clause. Mortgage companies today are asking for proof from the Buyer that the property will be insured. This has caused the Buyer to make sure properties qualify for home insurance before making their offers firm.
Condition on the sale of the Buyers Property. This clause will need to be looked at very carefully and with an open mind. It means, you are agreeing that the Buyer will only purchase your property if their property sells. Make sure if you are accepting this clause, that there is a provision for you to keep your property on the market and to look for another Buyer, while this Buyer tries to sell his property.
If your property is a condominium, you will see a condition on the Buyer getting a Status Certificate (in the Province of Ontario - other locations may vary). The status certificate assures the Buyer that the monthly common expense fees are up to date and how much they are, the amount of the Reserve Fund and if the Condominium Corporation is involved in any lawsuits, among other things. By law, the Condominium Corporation is allowed 10 days to provide this document. The Buyer will then ask for a few days for their lawyer to review it, typically two to three days after receipt of the document.
There are numerous other conditions that may or may not be in your offer but the above mentioned conditions are the most popular ones. You may even see a few unusual conditions such as a condition to allow a family member of the Buyers to see the property or a condition that allows time for the Buyer to be released from a previous transaction for example. These conditions should be reviewed by you and your Agent at face value to see if they are acceptable.
Now that you understand the conditions that may appear in your offer, we can move on to the procedure of the offer.
The Buyer Agent will arrive with, or may have faxed or emailed their offer to your Agent. If the Buyer Agent is present, it is a good idea to read over the offer and hold your questions or comments until you are alone again with your Agent. As we said at the beginning follow your Agents lead, let them ask the questions and make statements to the Buyer Agent on your behalf.
It is very rare that an offer comes in perfectly acceptable to you. There will usually be changes of some kind, whether price, the terms of conditions, the items the Buyer would like you to leave that you are not willing to, or the closing date. You guessed it! The most common change is price!
Your Agent will stroke out and make the necessary changes to the offer to reflect your wishes. This is called a counter offer. The Buyer's Agent will then take the offer to the Buyer. They can accept your changes or counter again, giving you their changes. This may go back and forth and back and forth a few times, before it is acceptable to everyone.
POINT TO PONDER - Keep in mind that no matter how friendly or nice the Buyer or the Buyer's Agent is, this is a game of friendly warfare. You and your Agent want the most money for the property and the Buyer and the Buyer Agent wants the property for the least amount of money.
There you go! Now you know a little about what to expect of the offer you are about to be presented with.
Please don't be emotional, don't be nervous. Think of it as a game of Poker, just remember the stakes are high, very high. The stakes are one of your biggest investments.