MAKING AN OFFER ON A HOME
Shopping for a home can be an exciting, albeit stressful process. Finding a property you love may feel like the pinnacle of the experience, but it’s really just the beginning. Once you find the home, there are several things that need to happen before it becomes yours.
Making an offer on a home is the first step toward ownership, but if you’ve never gone through the process before it can be an intimidating venture. The Gazette sat down with a couple of local experts to help give first-time buyers an idea of what to expect.
Before you start shopping, mortgage experts recommend doing a budget and getting preapproved for a mortgage.
“I like to do an initial call with the client or an in-person meeting just to figure out what they want, what their goals are, what price range they’re comfortable with, and so on,” said Teddy Kyres, mortgage specialist at BMO. “We make a budget based on their current lifestyle and rent or mortgage, and look at how their budget would change from one property to the next.
“Often, to own is a little more expensive than renting because of the monthly costs, initial costs, closing costs, and more, and you don’t want to be tight to the point that you have to use your credit card to furnish your property. You have to come up with a realistic budget.”
Once that’s hammered out, getting preapproved for a mortgage can give you an edge on the market. The preapproval is valuable because it shows sellers that the buyer is serious and that financing won’t be an issue.
Many people opt to shop for a property themselves, but using a broker can offer certain protections, and it allows buyers to tap into the broker’s professional network.
When you locate a property on the market that you love, formulating an offer is a relatively simple process, but there are many variables to consider. A broker will provide you with standard forms from the OACIQ (Organisme d’autoréglementation du courtage immobilier du Québec) that help facilitate the process.
“Each offer tells a story of who the clients are, where they are from, what their financial capacity is, and based on their conditions
you can almost figure out their personalities,” said Saguy Elbaz, real-estate broker with Sotheby’s International Realty Québec. “An offer is usually presented by a broker with an explanation of the buyers’ background and why they decided on their price and conditions.”
The standard conditions that are in a promise to purchase usually include: Verification of documents —
The seller must provide several documents including renovation or repair invoices, school and municipal taxes, a Hydro bill, etc.
Financing — The buyer must secure the financing required to purchase the home prior to the sale being completed.
Inspection — The buyer has the right to have the home inspected by experts of his or her choice within a specific period of time prior to the deal closing.
“These conditions are typical, but in general conditions can be variable depending on the property and circumstances,” Elbaz said. “For instance, the offer could be conditional on the seller repairing the kitchen faucet before signing the deed of sale.”
Determining how much to offer is a case-by-case matter; there’s no one size fits all.
“If property is in high demand, negotiation is not always an option,” Elbaz said. “In some cases, if a seller is getting multiple offers, it’s totally possible that he gets asking or above asking price in one or more of the submitted offers. On the other hand, if a property is on the market for a while and has not yet sold, this might be a good opportunity to try to negotiate a bit more. The same is true if the home needs work. In general, in today’s market, buyers usually successfully negotiate one to four per cent off the asking price.”
In the situation where two or more offers are on the table, the seller has to choose the one that he likes most based on price and conditions. A buyer who has made an offer must be told about any additional offers on the property, and has the right to amend his or her own offer as a result.
All offers have an expiration date, meaning that the seller must respond to an offer by accepting, countering, or declining it within a specific time-frame — usually 24 to 48 hours.
“If your offer is countered, you can either accept it or send a new counter offer to the seller,” Elbaz said. “If your offer is accepted, you’re locked in, but all parties must respect the deadlines and conditions set out in the signed offer.”
Once an agreement is in place for the property you’re buying, the bank will order an appraisal and evaluation of the property to confirm its value, and then formally approve the buyer for a mortgage.
“We confirm the term and the rates, make sure that the client is comfortable with everything we discussed, and then after the final approval letter is ready, the instructions for the mortgage are sent to a notary of the buyer’s choice, who will conclude the transaction,” Kyres said.
“There are usually two appointments with the notary — that initial meeting where the official mortgage documents are signed and the notary subsequently requests the funds from the bank, and then two or three days later for the final sale and the transfer of property.”
While the entire undertaking may seem daunting, working with the right experts every step of the way can help ensure the smoothest process possible while buying your first home.
“At the end of the day, it’s an exciting event in anyone’s life,” Kyres said.
“The key is to talk to someone before the process starts to avoid wasting any time, and knowing your budget. That allows you to confidently shop for your first home.”