Offer, Acceptance, and Home Inspection
After you’ve located a home you want to buy, your agent will walk you through the process of putting together an offer to purchase. Typically, the buyer’s agent presents the offer to the listing agent or seller on your behalf. In the hot Vancouver real estate market, properties in high demand may have several offers.
In some areas of Vancouver, competing offers will come in much higher than the asking price. Work with your agent to assemble a reasonable offer, including terms and conditions.
Components of a Real Estate Offer
Understanding the language of real estate offers helps you put together a solid offer representative of your best interests. Your agent can explain this part of the home-buying process, answer questions, and help draw up your Offer to Purchase. Components of an offer could include the following provisions:
- “Terms” include stipulations regarding financing, like the offering price for the property and the arrangement of financing.
- “Inclusions” and “Exclusions” refer to specifications contained within the offer that includes and excludes specific items from the sale of the property, such as appliance, drapery, or certain fixtures.
- “Deposit” denotes the funds put down as a token of the buyer’s assurance and seriousness in following through with the transaction. The deposit goes into an interest–bearing brokerage trust account and is applied to the purchase price at the closing. Your agent can give you advice and assistance on choosing an appropriate deposit.
- “Possession/Closing Date” refers to the date the lending institution put the funds for the purchase in place, when the buyer takes legal possession of the property from the seller.
- “Conditions” protect the buyer’s interest in the transaction. They list events that must occur before the transaction closes. Typical conditions included in an offer include items like “subject to obtaining financing in 30 days,” “subject to an approved home inspection,” or subject to the strata council accepting pets.”
It is not necessary for an offer to have conditions. Sellers prefer “firm offers” or those without conditions. On a hot property, a conditional offer could immediately eliminate you from consideration.
Include a time limit for the seller to accept your offer — normally 24 to 48 hours. If there are appliances, light fixtures, custom draperies, or other items you would like to include as part of the purchase, make sure you list them in the offer. If you need to sell your current home, make your offer condition upon selling your home by a particular date.
The seller could accept your initial offer, reject your offer, or present a counter-offer. The counter-offer may differ from your original offer in respect to price, conditions, closing date, or other items. Buyers and sellers often counter offers back and forth until one party accepts or rejects the offer, which ends the negotiations.
Acceptance of the Offer
Once the seller accepts your offer, you must complete the following tasks:
- Pay the agreed deposit, usually around 5 to 10 per cent of the purchase price.
- Have the property inspected by a certified home inspector, which is optional.
- Present a copy of the purchase contract and make final arrangements for financing with the bank or mortgage broker.
- Buy the necessary fire and liability insurance coverage.
Provide the seller with a written notice of the removal of any remaining “subject to” clauses. This action results in the offer to purchase or counteroffer becoming a legally binding agreement. Failure to meet a condition, or remove one, ends the contract.
About Home Inspections
Although home inspections are optional, many buyers feel more confident about their purchase when obtaining an inspection. A home inspection consists of a visual examination of key components of the home’s structure and heating, plumbing, electrical, roofing, and other systems. It is an emotionless method of evaluating the home and receiving objective feedback.
An inspection identifies any major defects in the property. The inspector advises the buyer about the working condition of mechanical systems and can provide an estimate of costs for any repairs or replacement.
Create a list of certified home inspectors from your agent, family, or friends. Find an inspector with credentials from an organization such as the National Institute of Building Inspectors (NIBI) or Canadian Association of Home Inspectors (CAHI). Avoid hiring an inspector whom you plan to hire to complete any work on the home. This eliminates any possible conflict of interest.
The home inspection is a condition that you must include in the offer to purchase along with a length of time for completing the inspection after the seller accepts the offer. After the inspection, the inspector prepares a report that details her findings. Schedule the inspection at a time when you can accompany the inspector during the actual inspection or walk through with the inspector after the completion of the report.
Some aspects of the inspector’s findings may require the assistance of a specialist for a more comprehensive evaluation. The cost of an inspection differs and depends on factors such as the size and location of the home, its age, amenities, or additional services like well testing.