The Offer document is "The Agreement of Purchase and Sale" with 8 basic elements:
1. The Property and the Parties
This includes the address and legal description of the property, and the names of the Sellers, the Buyers and the real estate Brokerages involved.
2. Purchase Price
Most sellers are looking to obtain 97% or more of their asking price. Depending on market conditions, your opinion of the value of the home and the comparative market analysis information that I provide, the price you offer may be different from the seller's asking price. Often there are several rounds of ‘sign back’ on the price before agreement is reached.
3. The Deposit
The deposit shows your good faith and will be applied against the purchase of the home when the sale closes. Deposits are usually 3 % to 5% of the purchase price. Depending on the length of time until the closing date and the type of Trust Deposit Account held by the Selling Brokerage, there may be opportunity to earn interest on the deposit.
4. Irrevocability
This is the length of time you are giving the Seller to consider and respond to your Offer. Usually this is a very short period expiring by the end of the day. If the owners are out-of-town, you may give them overnight to respond. In very ‘hot’ neighbourhoods, the owner may call for Offers to be submitted on a specific future date.
5. Completion Date
This is the date the title of the property is legally transferred and funds transferred to complete the purchase. Most typically the Completion Date occurs between 60 and 90 days from the date of the Offer. This may be a key negotiating point as Sellers often have a fixed date in mind.
6. Title Search Date
The lawyers will complete all legal reviews of the title to the property, usually two weeks before the Completion Date
7. Chattels Included and Fixtures Excluded
Items within the home that will be included in the purchase price such as appliances are referred to as chattels, and decorations such as drapes or mirrors are referred to as fixtures. Don't assume that anything will be left behind. If you want it, put it in writing.
8. Schedule ‘A’ Conditions
Most typically, your Offer will be subject to a home inspection and to your obtaining final notice of approval for financing. Those conditions will then be dealt with in a few days after which the deal becomes Firm. The conditions will allow for re-visits before the Completion Date and cover off various standard understandings between the parties.
