Assuming you’ve priced your house near the fair market value and your real estate agent is diligently spreading the word, you should expect to receive an offer (or even multiple offers, in a perfect world).
Offers arrive by way of a legal document called the Agreement of Purchase and Sale. The Agreement of Purchase and Sale specifies the price the buyer is willing to pay, details about the desired closing and deposit, any conditions the offer is contingent on, as well as any exclusions or inclusions the buyer wants on closing. Typically this is presented to your Agent by the Buyer’s Agent.
The offer can be firm or conditional:
- Firm offer to purchase: This is usually preferable to the Seller, because it means that the buyer is prepared to purchase the home without any conditions. If you accept the offer, congratulations! Your house is sold.
- Conditional offer to purchase: This means that the buyer has placed one or more conditions on the purchase. Common conditions make the completion of the sale subject to a home inspection, subject to financing approval, or subject to the sale of the buyer’s existing home. The house is not sold until all the conditions have been met.
Be sure to review the purchase offer carefully, and make sure you understand and agree to all the terms before you sign. It’s important to note that a signed offer is a binding contract.
Some of the elements that make up the offer to purchase:
- Deposit
The deposit shows good faith on the part of the Buyer and will be applied against the purchase of the house when the sale closes. It is typically delivered within 24 hours of acceptance of an offer and is anywhere between $25,000-$100,000 depending on the sale price of the home. - Conditions
Conditions are items that must be completed or fulfilled prior to the specified date (such as a satisfactory home inspection, obtaining financing, or selling the buyer’s existing house). The Buyer will list anything they want you to pay for: carpet cleaning, warranties and repairs, credits for damages, and so on. - Inclusions and exclusions
The offer may state that certain items are either included or excluded in the sale. This may include anything from appliances to decorative items, such as window coverings or mirrors (these are called chattels in legalese). - Closing day (or possession date)
In Canadian real estate transactions, the closing day is generally the day the title of the property is legally transferred and the transaction of funds finalized, unless otherwise specified (except in Manitoba and Quebec). In British Columbia, the possession date is legally one to three days after closing.
If there are terms in the Buyer’s offer to purchase that you don’t agree with, you may choose to make a counter offer (or even outright reject the Buyer’s offer). Often the seller and buyer will have to negotiate to arrive at terms that both parties find agreeable.
When the negotiations are complete and all the terms are agreed upon, the buyer’s agent usually prepares a copy of the agreement of purchase and sale showing only the final terms. Careful attention to detail and consideration of the buyer’s point of view should result in a happy outcome.