When the Buyer sees a home they like and want to buy, then an Offer is prepared.
Here are the basic steps you go through. As your Realtor I will guide you through the process.
Any questions? Just leave me a comment and I will get back to you.
1. Before making an offer on home. All Buyers will need mortgage pre-approval with Bank or Mortgage Broker before making Offers. The bank will let you know what your upper limit is for price of home, monthly payments, down payment (5%, 10%, 25%, etc), interest rate, type of mortgage, etc. CMHS (Canada Mortgage Housing Insurance) insurance will most likely be needed for first time buyers, speak to your Bank or Mortgage Broker about “High Ratio Mortgages”, where insurance is required for mortgages higher than 80% of the value of the home.
- Buyers need Mortgage Pre-approval before making an Offer to Buy a Home.
- Buyers need to have cash ready for the deposit.
- 1st time Buyers need to know how they can terminate their rental agreement, quickly.
- Does Buyer need to sell their existing home? Is it on the market?
If the deposit is in RRSP account for example, now is the time to remove from RRSP, and transfer the cash into your chequing account. Ready for making the deposit payment. Deposits amounts vary depending on value of home, market conditions, and how strong an Offer the Buyer wants to make. Deposits are usually in the range of $5,000 to $25,000. The Realtor will assist the Buyer in choosing the appropriate amount.
2. Making Offer on Home. Make sure your Realtor is aware that you like the home and want to make an offer on the property. The Buyer does not have to offer the List Price. You can make an offer of any value. Consult with Realtor on Purchase Price and market factors that come into play.
3. Buyer’s conditions are very i mportant for you to have. The Purchase Contract will detail all the buyer’s conditions. The buyer will generally have conditions that last for 7 to 10 days. Once the conditions are removed and/or met the sale will proceed and it is expected that the buyer will move ahead with the purchase of the property. Conditions are generally required to protect the buyer, for example:
§ Finance Condition (Mortgage)
§ Property Inspection Condition
§ Condominium Documents Condition (Document Review)
§ Sale of Buyers Home Condition (not needed for 1st time buyer)
The buyer will usually have 5 to 10 days to meet the conditions. If the buyer conditions cannot be met or satisfied, the buyer can terminate the Purchase Contract and receive the deposit back in full. Once the conditions have been met the Purchase Contract is binding and will proceed. The sale will happen on the Completion Day. The buyer should be in regular contact with their Lawyer, Lender and Realtor to ensure a smooth sale.
4. Purchase Contract (PC): Your Realtor will prepare a written Purchase Contract for you to sign. The Purchase Contract contains the Offer to Purchase and is prepared at the time of Offer. The items in the Purchase Contract the Buyer should be aware of are:
- Purchase Price
- Deposit Payment (required at time of Offer)
- Completion Day
- Buyers Conditions
- New Financing (Mortgage amount)
- Down Payment: required before Completion day, deposit payment usually goes towards the down payment.
- Property Address and Legal Address
- Sellers & Buyers legal names are needed.
- Sellers Conditions
- Items included in sale, e.g. stove, all window coverings, washer and dryer
- Items not included in sale, e.g. garden shed
- Signatures are required from Sellers, Buyers and witnesses.
- Counter offer may happen. The Seller may not agree with the Buyers Offer and “Counter” the Offer.
- Buyers and Sellers must read the Purchase Contract so they have an understanding of all the clauses. Your Lawyer can explain in detail any items that you may not understand.