Are you a first time home buyer and you found a house you like and you are asking yourself, now what? I am going to walk you through what you need to know about submitting an Offer, including some terms you will want to know and I will give you some important tips to keep you out of legal trouble. You will feel more confident about buying your first home. I found a house I like, now what?
In how we will approach your Offer, we will want to know if the Seller is holding Offers which in this market occurs more often than not. This means that the Seller will list the home and schedule a date and time when they will review any Offers, generally one week after listing. This will give you time to do a couple things, reach out again to your bank or mortgage broker to discuss the home you are interested in. Schedule a pre-offer home inspection. Contact internet providers to ensure the connection meets your needs; have a conversation with your insurance agent to ensure your home will be covered. There are insurance concerns that you need to be aware of that may hinder receiving insurance, like, kitec or galvanized plumbing or aluminum wiring. Your Realtor will help you with your questions and concerns.
What is a Pre-Emptive Offer/Bully Offer
When the Seller decides to hold offers, they may or may not consider pre-emptive or bully Offers. This means that if the Seller decides, they will look at Offers prior to the scheduled Offer day, Sometimes they will be more specific of the terms that they want in Bully Offer, for example, over list price or no conditions. If they don’t want to review Bully Offers then everyone submits their Offer at the same time on the day that is scheduled. We will not know the terms of any other Offer nor is the Listing Agent allowed to disclose what is in any Offers that are received. When you are competing with multiple Offers, my advice is to put your best Offer forward as you may not get a second chance to submit. There is nothing worse than knowing what the home sold for and being disappointed as you may have gone higher.
What Price do I Offer?
To submit your Offer, you will go over the terms of what you want with your Realtor and that will be included in an Agreement of Purchase and Sale. Of course the most important question will be the price. A couple items determine your price. Obviously your budget and being pre-approved in advance will give you the confidence of what you are comfortable with. Your Realtor can provide you with what is currently for sale in the area and what properties have sold on MLS or for sale by owner and for how much. As well, if you know there are going to be multiple Offers, take that into consideration for your Offer as well. The more Offers there are, the more likelihood of the home being sold for over list price with no conditions. Don’t worry, you will not offer more than what you are willing to pay. There are instances where the listing will indicate what closing date the Sellers and the amount of the deposit that they wish. For example if Seller asks for a $5000 deposit and your Offer is accepted, you have to provide the deposit within 24 hours of your Offer being accepted. If not, you can lose the house, lose your deposit and potentially be in legal hot water which can be very costly and stressful. You will be credited for your deposit on the Statement of Adjustments which I talked about in my previous blog. If you want to make your Offer as attractive as you can in a multiple Offer situation, then accommodate the Seller’s wishes and if possible, submit with no conditions or even provide a letter or video from you.
What Are Some Conditions that Are In An Agreement of Purchase and Sale?
What are some of the conditions in an Offer? This may be financing, home inspection or if you are buying a condo, a status certificate review. Sometimes you won’t be in a position to satisfy those items before submitting an Offer, so you will include them as a condition in your Offer. For example, in your Offer, you would include a financing condition for let’s say 10 days. You either fulfill your condition or if you can’t, you would ask for a Mutual Release and get your deposit back, as long as you acted in good faith in attempting to fulfill your conditions. If you are having cold feet about buying the house, then don’t submit an Offer. This just may not be the house for you. If you fulfill your conditions, congratulations you have purchased your first home!