style="font-size:15px;"> It takes perhaps 2 or 3 outings before a client is ready to select one on which to make an offer. Frequently the home that is selected was viewed on the first day. But viewing others simply confirms that the first choice is the best choice. As a REALTOR®, I have to respect my client’s decision making process and timing. In most instances, this is all within the framework of reasonableness. Extreme unreasonableness is rare but has to be addressed and resolved.
It is worth noting that in a fast market where many buyers are competing for the available properties, sometimes you don’t have the luxury of time. In those instances, I have warned my clients that if they have found a home they really like, they should seriously consider placing an offer immediately. That really sounds like a ‘pushy’ REALTOR®!
Nevertheless, it had to be said. Some wanted the extra time to discuss the property over the course of the evening and then decided to make an offer the next morning. Unfortunately, the property had sold the previous evening. The search then continued and the mind set adjusted to the circumstances.
The Offer
After all the viewings and evaluations, you have made your selection and are now prepared to make an offer. You have already looked over the blank Contract of Purchase and Sale and the Addendums that I included in your Buyer’s Package. I will now go over the major parts -- primarily the parts that have to be completed.
Price
To help you decide the price you will offer, I provide you with all the information available to that point. I obtain the Property Assessment for this property, the listing history as well as current and more recently sold similar properties in the area. This will enable you to evaluate the asking price of this home and determine if the price is within a normal range of similar properties in the area you are purchasing.
I am happy to participate in the discussion and lend my experience to the situation but ultimately, the price offered is your decision.
Property Assessment
I answer any questions you may have as you deliberate. One of the questions is generally about the dollar value of the property on the assessment. An assessment is not the same as an appraisal. Assessments are used as a base for property taxes.
In BC, property assessments reflect prices as of July 1 of the previous year. In addition, year-to-year adjustments are based on a formula and not by inspections. For these reasons, assessments do not reflect market value today.
Not all regions utilize the previous year’s information. Ontario, for instance, uses the same base year for four consecutive years. This certainly increases the distance between assessed value and market value.
Property Appraisal
A property appraisal can be done any time by inspecting the property. For residential properties, the direct comparison approach of similar properties is utilized. The appraised value reflects market value on that day. An appraisal loses accuracy and validity over time because of market changes.
Deposit
I recommend that a respectable deposit be included to demonstrate the seriousness of your offer. The deposit forms part of the selling price and is generally returned to the buyer if a satisfactory agreement cannot be reached. The usual process for releasing the deposit and the contract is through the signing of a release by both seller and buyer.
The deposit is usually held by the real estate company as a stakeholder and not for the benefit of either the buyer or seller. In many jurisdictions deposits are required by certified cheque or bank draft.
In some areas, the custom is not to take a deposit until all conditions have been removed. This is not my preference. It has been my experience that sellers look much more favourably at an offer with a deposit, and even more favourably when it is a generous deposit. When I am representing my client, I want to ensure that his offer is seen in the best possible light. A good deposit accomplishes this.
Contract Dates
I then cover all the dates that appear in the contract.
Of course, there is the date you write the offer. Then we discuss the date you would like to have the keys to actually move into your new home - the possession date. Once we establish that, we can establish the day that money and title change hands or completion date. This day is usually a day or two before possession date. Some jurisdictions also have an adjustment date which can be the same as completion date. This refers to any financial adjustments the lawyer or notary may have to make with respect to property taxes, prepaid fees, rents and the like.
The offer has a limited life span. This means that it is only open for acceptance for a specified period of time. This can be as little as a couple of hours or a couple of days or even more depending on the market conditions and situation. In some jurisdictions, this date is referred to as the irrevocable date.
The last date in this grouping is the acceptance date. This is the date on which both buyer and seller agree to the terms of this contract. This may be the same as the offer date or several days later if counteroffers have gone back and forth. Besides the acceptance date itself, often the time of acceptance is also noted.
Agency Relationship
The Contract of Purchase and Sale also addresses this relationship. It requires that we stipulate who represents the buyer; who represents the seller; is it dual agency; or is one of the parties not represented.
We discussed all of these scenarios when you signed the `Working with a REALTOR®` brochure at our first meeting. The contract requires that the relationships be spelled out here.
Terms Agreeable to both Buyer and Seller
Clients often ask me what kind of subject to’s or conditions should be placed in a contract. There are major conditions that have to be inserted to protect you but aside from that, there are few restrictions. The important aspect is that both buyer and seller have to agree to the terms.
Perhaps this example will illustrate my point.
I had clients who had been renting for years and had been thinking of purchasing a small home. Prices were too high for a single family home but a mobile home might be possible. They drove through some mobile home parks and found one that they just loved - on a hill with ocean view and a sun room! They called me and I suggested that they get pre-approved. A few days later, they told me that they couldn’t get financing for a mobile. I then recommended that they see someone else and I arranged the appointment. In another few days, they called and said that they could get pre-approved, if they had an additional $3,000 for their down payment. Also the pre-approval dollar amount was a bit less than the asking price for the mobile. They indicated that they had a relatively new scooter that they have been trying to sell and if they could sell it they would have enough money for the down payment.
To disclose any of my client’s personal information, I needed to obtain their permission. Having obtained it, I verified their situation with the mortgage broker and then called the listing REALTOR®. I chose to discuss part of the circumstances with the REALTOR® instead of proceeding with an offer because this was a unique situation and I didn’t wish to waste any one’s time. I explained that I had a client who was very interested in her mobile home listing
