What To Expect When You Are Making An Offer
You walk into a home and are immediately swept away. It's as if the real estate gods have plucked the perfect space from the heavens and dropped it in front of you. Elated, you look over to your Realtor and give them a nod of approval. You want to make an offer - great! But now what?
The offer process can seem incredibly daunting, even if you're a seasoned Buyer. The pages and pages of paperwork littered with real estate clauses are jargon to you, and well, that's why you hire a Realtor. As trained professionals, they are expected to understand these documents (in fact, they are legally licensed to), and their role is to walk you through it all.
Here's what you can expect when you are making an offer. (This doesn't include bully offers, though, so keep that in mind.)
1. THE PRICE AND CONDITIONS
The price of the property for sale is not finite. Your Realtor will be able to determine what the fair market value of that property is and provide guidance on what the starting point of your offer price should be. They will also give you guidance on what other clauses and conditions you should include to protect your best interests.
2. THE AGREEMENT OF PURCHASE AND SALE
There is a lot of paperwork involved in making an offer, but the Agreement of Purchase and Sale is the official offer to the Seller.
3. THE IRREVOCABLE PERIOD
The offer you submit is only valid until a certain amount of time - this stage is called the irrevocable period and is the length of time the Seller has to consider your offer. If the irrevocable period has expired and the Seller has not accepted or countered your offer, the offer becomes void and you are no longer committed. Typical irrevocable times vary and can be anywhere from 24 to 72 hours but in a hot real estate market, it can be as little as a couple of hours.
4. THE OFFER PRESENTATION
Offers are presented in various formats but often the Realtors of the Buyer and the Seller make arrangements for an offer presentation - either in person or by email. The Buyer and the Seller does not have to be present but it's a good idea for the Buyer to be available (if not in person, by phone, text or email) should things move quickly.
5. THE NEGOTIATION
When the Seller receives an offer, they can do one of three things:
Accept the offer as is: They accept the terms, conditions and the price of your offer and it's signed! Hooray!
Sign back the offer with different terms and/or price: This is now a counter offer, which means the Seller is willing to work with the Buyer until a mutual agreed upon offer is reached.
Decline the offer: If your offer does not meet the expectations of the Seller, either with the initial offer or in negotiations, then it's declined. A common instance where an offer is rejected, right off the bat, is if the Buyer attempted to make a low-ball offer.
If your offer has been accepted you will now be required to provide a deposit to the Listing Brokerage within 24 hours. If there are any conditions (i.e. financing, status certificate review or inspection), then those need to be fulfilled within the indicated timeline. If there are no conditions and the deposit has been paid, then your offer is now firm and remains pending until it closes. In this time, you will have a lawyer facilitate the closing of your property and ensure you are protected with all the necessary next steps.
Buying a home is an exhilarating experience and the decision to make an offer is a big step towards achieving that goal. Your Realtor will prepare you, guide you through the process, and be a knowledgeable resource. It's a big undertaking and, potentially, the biggest financial investment you make.
For a comprehensive look at our buying experience, take a look at
North Group’s Steps of the Buying Process.