House hunting can be exciting! But when the time comes to actually make an offer, things can suddenly seem daunting! Don’t worry, it doesn’t have to be.
Once you find the right house and you are ready to make an offer to purchase, there are certain things you should have prepared prior to making that offer that will make the process much easier & less stressful.
Get Financing Prepared In Advance
Before you set out to search for a new home, it is paramount to ensure you have spoken with either your mortgage broker or banking mortgage agent to get some financing options and a pre-approval in place. This will take a lot of the guess work out of the process so you can search withing your price range.
It will also ensure there is less disappointment during the offer process when you risk either losing out on the property because of a condition of obtaining financing in your offer, or because you cannot get the amount of financing you require because the property was too expensive.
It is a good idea to make a spreadsheet with your budget and potential costs that will be associated with the type of properties you are looking at. Ensure you include taxes, utilities, maintenance costs or maintenance fees in this calculation.
Heading to the market? Explore these other pages from our site to launch your buying journey.
Once You Have Pre-Approval
Once you have a pre-approval in place you will be able to clearly understand what effect different prices will have on your overall payment and what impact that might have on your overall affordability, all of which should be considered when your presenting the offer on a home. It will also ensure you can reduce the emotional component from the offer process so you don’t end up in a situation where your offer is beyond what you can afford.
Need mortgage advice? We work with a number of mortgage brokers and lender and would be happy to provide you with a referral.
Have Your Real Estate Sales Representative Provide You With A CMA
A CMA or Comparative Market Analysis is used to compare recent and relative sales to the subject property you are interested in purchasing. Ensure your Realtor provides you with all the comparable sales in what should be a comparable market period to review. This will help compare any unique features, location and lot size to the listed price.
From here you can determine an appropriate offer price within your budget. Sometimes a property is listed high compared to the other sales for a good reason and sometimes not – but It is only from the CMA that a true value can be determined.
Buying your first home? Click here to read our list of the best Toronto neighbourhoods for first-time buyers.
What Information Is On An Ontario Real Estate Offer Document?
Generally, every real estate offer will contain certain information that must be included in the document. There are some minor differences in the document if it is a freehold property vs a condo or leasehold property, but ultimately, every offer document will contain the following information;
- The names of both the buyers and seller
- The property address & legal description
- The date the offer is being presented
- The deposit being offered to the seller by the buyer
- The purchase price being offered to the seller by the buyer
- The irrevocable date (date the offer expires)
- A schedule with any conditions that must be met prior to the purchase being finalized. (financing conditions or inspection conditions etc)
Buyers should expect some of this information such as the price to be negotiated with the seller. This can be the part where it can be stressful but if you prepare for this in advance you will be ready for some “back and forth” on any negotiable items on a your offer.
Down Payment
Before you make an offer on a home, it is important that you have saved for the down payment. If a financial gift is being provided, then that will need to be disclosed to the lender. In Ontario, the down payment you require is as follows:
$500,000 or less
- 5% of the purchase price
$500,000 – $1.5 million
- 5% of the first $500,000 of the purchase price
- 10% for the portion of the purchase price above $500,000
$1.5 million or above
- 20% of the purchase price
The amount of down payment required may vary depending on the buyer’s employment and credit history.
Deposit
Be prepared to have a deposit ready prior to submitting your offer. This is not the same as a down payment provided to the bank on closing. If your offer should be accepted, you will need to have a deposit delivered to the listing brokerage within 24 hours of the acceptance of the offer.
The deposit will be held in trust by the listing brokerage until the offer is 1. Firm and 2. The purchase has closed and is completed. The amount of the deposit can usually be negotiable, but it is common for sellers to be asking between 4%-5% for a deposit amount.
The deposit is generally delivered to the listing brokerage in one of two ways.
- Via bank draft
- Via wire transfer
The listing brokerage will provide your buyer sales representative with a copy of the wire details so you can easily go to your branch to prepare the bank draft or wire transfer.
When Is An Offer Firm?
Depending on the conditions you include in your offer, your offer may be firm on the day you submit the offer to the sellers once everything is agreed to, or if you have conditions included in the offer it may not be firm until those (inspection, financing) conditions have been satisfied.
Once all the conditions in the offer have been satisfied and the appropriate waivers or notices have been signed the offer becomes FIRM and the contract becomes legally binding, and the deposit can no longer be released to the buyer. If for any reason you do not understand anything within the offer you should consult legal advice.
Legal Fees & Lawyer To Close The Purchase
Once the deal is firm, you will need to submit all the documents to a real estate lawyer who will assist with the closing. They will do the title search prior to closing and ensure all the funds from the bank are transferred on time to the seller to ensure a smooth closing. They can also answer any legal questions you may have throughout the process.
If you need help purchasing property we can help! We are an experienced team of agents that can help guide you throughout the offer process. We have a deep referral network of mortgage agents and lawyers that will provide you with financial options and assistance with closing.
Getting ready to buy? Call (416-884-8027) or email (team@amblerhomes.com) today for a free buyer’s consultation or for more information about how we can help!
Meet The Team
We’re West Toronto experts ready to help you exceed your real estate goals.
