Calgary Home Buyers Guide: Understanding Offers (Important!)

October 13, 2014
By Cody Battershill

Understanding Offers is Important for Calgary Home Buyers

If you're a Calgary home buyer, you may put in anywhere from one to several offers before a deal solidifies.

For home sellers, the same is true; you may receive quite a few different offers from a variety of potential buyers before finally getting one with the price, terms and conditions you desire.

Hence, it is extremely important that if you are buying or selling that you understand every clause in an offer.

It is also crucial to keep up-to-date with anything that might change during negotiations, something that your real estate agent presumably will make sure that you are aware of. Changes could be made to any of these categories you’ll see on an offer:

Purchase Price

The amount of money the buyer is willing to pay for the property. It is best to ask your real estate agent what offer is reasonable as each situation is unique.

Terms

Within an offer are certain terms, the most common are the total price and how the transaction will be financially arranged. Financial arrangements usually fall into one of two categories for buyers:

Personal arrangement of financing through a mortgage broker or local bank

Assumability of the seller's current mortgage, where the buyer takes it over completely

Conditions

Conditions of an offer are there in order to protect both party's interests throughout the transaction. They outline what events must happen or be in place by a certain date in order for the sale to close. Some common conditions you'll see include:

"conditional upon passing a professional home inspection"

"conditional upon possession date of xx/xx/xxxx"

“conditional upon condo board allowing pets”

Inclusions and Exclusions

This section will tell the buyer and seller exactly what items will be included or excluded in the purchase. Most sales include the kitchen appliances, window coverings, washer / dryer and other appliances or fixtures that are custom fits in the home.

Deposit

Buyers are required to deposit funds to the buyer as a token of interest in their property after an agreement is reached. deposit is applied to the total purchase price of the home one everything is finished and can range from five thousand to tens of thousands of dollars.

Closing Date

Closing date is an important one as it is typically the day where the property’s ownership is transferred from the seller to the buyer. Most often than not, it is also the day where the transfer of funds is also concluded.

Possession Date

Possession date is when the buyer takes actual possession of the property as outlined in the contract of purchase between parties.

Now that we are familiar with some of the terms seen in an offer of purchase, we can now take a look at the three basic steps involved in the offering process:

Step #1

Once you find a desirable home, your real estate agent will then guide you through the process of creating an offer, usually with specific terms and conditions that you desire.

However, not all offers have to be “conditional”. A firm offer, for instance, is one without any conditions although most home buyers prefer conditional offers as they protect their best interests during the purchasing process.

Once the draft is completed, your REALTOR® will present it to the home seller on your behalf.

The home that you made an offer on could also have one, two or even several other offers on it already, making it a competitive process.

Step #2

Once the offer has been submitted to the seller, they may reject it, accept it or come back to you with a counter-offer which may be slightly different in asking price, closing date, conditions or anything else associated.

Counter-offers can go back-and-forth between the buyer and seller multiple times before one is finally accepted, or, completely rejected, ceasing all negotiations between parties.

Step #3

Assuming that an agreement on a particular offer has been reached, you’ll want to secure the transaction by making a deposit of a pre-determined amount (usually outlined in the offer) to the seller which also reinforces your interest in the property.

Then comes closing which is an entirely new process in itself. Stay tuned to our Calgary Home Buyers Guide for a new article on closing day!

Questions about Buying a Home in Calgary?

As an experienced Calgary REMAX Real Estate Professional, I will provide you with the best level of service and expertise the industry has to offer while discerning all your real estate needs. Call me anytime at 403-370-4180 or message me below and let’s get you started!