How to Make an Offer

How to Make an Offer: Your Comprehensive Guide to the Home Buying Process

Congratulations! You’ve finally stumbled upon the perfect home or cottage that meets all your needs and desires. Whether it’s a cozy retreat in the woods or a charming family home in the suburbs, the excitement is palpable as you envision your future in this property. But before you can officially call it yours, there’s one crucial step you need to navigate: making an offer. If you’re unsure how to make an offer, don’t worry—we can guide you through the entire process.

Understanding the Basics: What Is an Offer?

At its core, making an offer on a property means formally proposing a price and terms to the seller for the purchase of their property. This offer is typically documented in a legal document known as the Agreement of Purchase and Sale (APS). It serves as a binding contract that outlines the terms under which you agree to buy the property, including the purchase price, deposit amount, and any conditions you may have.

Step 1: Research Current Market Conditions

Before you make an offer, it’s essential to understand the current real estate market conditions in your desired area. This will help you gauge an appropriate price to propose. Think of it as gathering intel before entering a negotiation. An experienced local real estate agent, such as John or Mark Aben, can provide you with up-to-date information about comparable properties (often referred to as “comps”) in the neighbourhood, recent sales data, and even the average time properties are spending on the market. All this information will empower you to craft a competitive offer.

Step 2: Determine Your Offer Price

Once you have a clear understanding of the market, it’s time to determine your offer price. Factors to consider include the property’s condition, location, and how long it has been on the market. If the home has numerous interested buyers, you might consider making a list price offer or even a slightly higher bid to stand out. Conversely, if the property has been listed for a while with no offers, you may have more room to negotiate.

Tip: Set Your Budget

Before making an offer, always review your financial situation and set a maximum budget. It’s easy to get caught in the excitement and overspend, so align your offer with your financial capabilities to ensure a sustainable purchase. Part of knowing how to make an offer is determining your limits and working within them.

Step 3: Drafting Your Offer

After determining the price, you’ll need to have your agent draft the offer. This is where working with a professional real estate agent can be invaluable. They will help you draft your Agreement of Purchase and Sale, taking into account various factors, such as:

– Contingencies: These are conditions that must be met for the sale to proceed. Common contingencies include financing, home inspection, or the sale of your existing property.
– Deposit Amount: Generally, a deposit of 5% of the purchase price signifies your commitment to the offer. This amount is generally due upon the acceptance of the offer.
– Closing Date: Specifying when you want to take possession of the property is crucial. Be flexible and considerate of the seller’s timeline, if possible.

Step 4: Submit Your Offer

Once your offer is drafted, your real estate agent will present it to the seller or the seller’s representative. This is a crucial moment in the process, especially in a competitive market where multiple offers may be submitted on the same property. A knowledgeable real estate agent will effectively communicate your offer, highlight your strengths as a buyer, and ensure that your proposal is both compelling and respectful of the seller’s expectations.

Navigating Multiple Offers

If you find yourself in a bidding war, it can be overwhelming. Rest assured, you’re not alone. A proficient agent can guide you through strategies to enhance your offer while keeping your budget in check. This could include offering a higher price, increasing your deposit, or removing certain contingencies to make your offer more attractive. Remember, it’s important to remain patient and not to rush into decisions simply out of fear of losing the property.

Step 5: Negotiating Response from the Seller

After you submit your offer, the seller will review it and may respond in several ways:

1. Acceptance: The seller agrees to your terms, and contracts will be signed.
2. Counter-Offer: The seller may propose different terms or a different price, prompting a discussion before any agreements are reached.
3. Rejection: The seller declines your offer, which may lead you to reevaluate your options or consider making a new offer.

It’s crucial to remain flexible during this stage and to communicate openly with your real estate agent about your willingness to negotiate.

The Final Steps

Once both parties agree on the terms, you’ll proceed to finalize the sale through legal processes, financing arrangements, and inspections, among other details. Knowing how to make an offer is just the beginning of your journey in home buying, but with the right guidance and preparation, it can lead to achieving your dreams.

Navigating the home buying landscape doesn’t have to be daunting when you have knowledgeable professionals by your side. Whether you’re just beginning your real estate journey or you are ready to go and need advise on how to make an offer on your dream property, we can help!

*Agreement of Purchase and Sale: A legal document which specifies the terms and conditions of your offer to purchase the home. The offer can be Firm or Conditional.