Getting an offer on your property is exciting. While your real estate agent’s role is to guide you through the offer process, familiarizing yourself with various aspects of offers will help things go smoothly.
A term is a detail in the purchase contract that the buyer and seller agree to. Common terms include:
the date on which the buyer will take possession of the property.
Inclusions are those items the buyer wants included in their purchase, typically appliances, security systems, etc., and exclusions are those items excluded from the purchase, for example if the sellers are taking the attached curtain rods or TV wall mount with them. Carefully review the inclusions/exclusions in the buyer’s Offer to Purchase as they may not be the same as what you had in the listing.
If the buyer put an expiry date/time on their Offer to Purchase, make sure you provide a response or a counter-offer before that day/time. If you don’t, the offer expires, and there is no guarantee the buyer will extend the expiry or submit a new Offer to Purchase.
A pre-possession inspection term gives the buyer the opportunity to view the property, with their real estate professional, prior to possession. Such an inspection can help the buyer confirm the property is in substantially the same condition as it was when they viewed it and made their offer.
Buyers often place conditions in their Offers to Purchase in order to protect their interests. When the buyer writes a conditional Offer to Purchase, it means they want to buy the property but before making it a firm sale, they want the ability and time to review or confirm information. Financing conditions and home inspection conditions are common for many buyers.
All conditions need to have an expiry date. The buyer will want to include expiry dates that provide them with enough time to satisfy those conditions – or, enough time to determine that they will not be waiving the conditions. When you accept a conditional offer, the deal doesn’t become final until the buyer satisfies and waives their conditions. If the buyers don’t waive their conditions in writing by their expiry date, the contract ends, and you and the buyer have no further obligations to each other.
A buyer should provide a deposit with their offer. The deposit amount sometimes demonstrates how serious the buyer is about the purchase. The Offer to Purchase will also include details on who will hold the deposit in trust. It could be the seller or buyer’s brokerage, or a third party, such as a lawyer.
The buyer’s Offer to Purchase needs to be clear about the way in which communication must occur between the buyer and/or their real estate professional, and you and/or your real estate professional. The standard purchase contract in use in Alberta allows for in-person delivery, or communication by fax or email.
A holdback is when a buyer holds back some of the purchase price until the seller completes certain items or tasks. Common reasons for a buyer to propose a holdback include:
A holdback is a formal agreement between a buyer and a seller; buyers can’t simply decide to hold back funds at closing because they see something they don’t like. If a buyer wants the option of a hold back, they need to include it in the purchase contract and the seller needs to agree to it.
There will likely be some negotiation between you and the buyer after they submit an Offer to Purchase. You can outright accept or reject their offer, make a counter offer, or ignore their offer completely.
The list price is the price at which you listed your property, but there’s a good chance it’s not what a potential buyer will offer, at least not as a first offer. It’s up to you whether you accept a buyer’s offer. The buyer probably thinks your listing price is too high and you probably think their offer price is too low, so now what?
Negotiate! You can accept or reject the buyer’s offer, make a counter offer, or ignore the offer completely.
In each of these situations, your real estate professional will discuss your options with you, and highlight the pros and cons of each. Ultimately, it’s your decision how to proceed.
It’s also your decision how to proceed in the event of multiple offers. A multiple offer situation is when multiple buyers submit an Offer to Purchase on the same property, at the same time. As the seller, you determine the process to follow, including whether you want to disclose the multiple offer situation to potential buyers, and whether you want to disclose the terms and conditions of offers you receive to the other potential buyers.
Your real estate professional should:
If you disclose the multiple offer situation to buyers, they will have to decide whether to:
Potential buyers may include a term in their offer that prevents you, as the seller, from disclosing the details of their offer. If they include such a term, you must abide by it. They are also required to indicate if their offer is conditional on the sale of their current property, which may affect your decision.
Sellers often accept conditional offers that set out the terms of the proposed sale (purchase price, the closing date, etc.), and any conditions that must be met within a specified period of time (financing, home inspection, etc). Accepted conditional offers do not always become binding contracts as the buyer may be unable to satisfy conditions.
When you accept a conditional offer, you have to decide if you want to disclose the existence of the accepted conditional offer to other potential buyers.
Discuss your options with your real estate professional before proceeding.
It is your choice whether to disclose, your real estate representative must follow your lawful instructions regarding disclosure.
If you disclose:
If you don’t disclose: