Have you decided on the property you want to purchase but are scared to be blind sided by next steps in the buying process? Do you feel like you simply don’t know what to do next and would like some guidance? No need to stress!!! In this video I’ll go through the 6 steps of making an offer!
If you followed tips from my previous post: ‘My top 5 tips on making your property search the most rewarding experience’, you now have a chosen property and you should be ready to make an offer!
So what are the steps of making an offer? There are 6 main steps that should be well understood when making an offer.
Step 1: PRICE
You will need to decide on the price you want to offer. This is probably the most important step in the offer preparation. Very rarely anything else trumps the price. Make sure your price is competitive if you are competing and market appropriate. If you are not competing, you don’t want to start the process with creating negative feelings from sellers. It’s kind of your first impression, so make sure to do some research on pricing and offer something within reason while trying to get the best deal possible. Another important factor to consider here is, work within your own budget as well, don’t overextend yourself!
Step 2: CLOSING
Once you’ve decided on your price, decide on your closing. It is important to have a clear understanding on what date would work best for you. Figure out things like moving. Can you manage moving from one place to another on the same day, or will you need an extra day in between? If you are also selling your own property, find out your mortgage bridging costs. If you are renting, figure out your exact move out date and give appropriate notice to you landlord. Usually it is 2 full months, so even if you give notice say July 15th, you will need to count your two full months starting on the 1st of the month. You may have some flexibility with your landlord, so it might be worth researching it further. You may have your ideal closing date, but it does not mean that date will work for the sellers, so try to have a back up plan in case sellers simply cannot accommodate your date, so things like alternative place to stay, storage, etc.
Step 3: CONDITIONS
What conditions do you need or want in your offer? It all depends on the property you’re making an offer on, and the market you’re in. If the market is super competitive and your offer is not the only one, your chances of having an offer accepted with conditions will be slim to none. If that happens, don’t get scared, figure out the way to address any concerns you might have, if you are worried about your financing, talk to your mortgage broker and make sure your approval is solid, if you are concerned about inspection, do a pre inspection appointment.
If the market is easier for buyers and you are not competing, then you can breathe a little and have your conditions in, but remember conditions are not your free for all get out of jail card.. You are still committing to the purchase of the property and you are required to act in good faith. If say, your inspection shows issues you have to be open to work with the seller to resolve them. Financing should also be in order. One condition that should not be avoided is review of the condominium status if you are purchasing a condominium. In the height of sellers’ market, listings sometimes had those available for review way ahead of offer presentation date so potential buyers had time to have their lawyers review them, but it is important that lawyers review them before you waive that condition.
Step 4: INCLUSIONS
What do you want to be included with the purchase of your property? Make sure that all chattels that should come with the property are listed in the offer. There might things that you would like despite them not being listed in the listing, you might be able to negotiate those in as well. You will also need to specify the exclusions, those are usually listed by sellers but you might have some request on specific things that you would like to be removed. Another important item here is finding out what are the current rental items that you will have take on, very often we see things like Water Heater to be a rental, but sometimes you will see things like Water Softener, alarm system and even AC, so make sure you are aware of those and if you prefer, find out if the sellers is willing to buy those out or find out the cost for buying them out.
Step 5: DEPOSIT
Sellers usually specify the amount of deposit they require, once the offer is accepted. Remember that you are obligated to deliver the deposit within 24hrs of acceptance of your offer, so make sure you know the amount required and you are able to provide that amount in that timeframe.
Step 6: IRREVOCABLE
Have a clear understanding of the irrevocable time. Usually sellers’ specify how much time they need to review and respond to the offer, but it is important to understand the timeline.
Thank you.
Hopefully now you have a better understanding of how to make an offer! Thank You for joining me today, feel free to reach out to me direct if you have any real estate related question. I’m here to help!