What to Expect with an Offer
What is the REAL DEAL?
AGREEMENT OF PURCHASE & SALE (AP&S):
Typically a 7-page document that outlines all the terms of the offer (price, dates/deadlines, deposit amount, inspections, financing details, etc.) for the purchase between a buyer and seller. It is considered to be a “legally binding” agreement once executed by both parties.
APS is hand-delivered to the listing agent by the buyer’s agent with a deposit cheque.
The Real Deal
APS are usually submitted electronically to the listing agent by the buyer’s agent. Sellers can accept reject or make a counter offer. When both parties reach an agreement on the terms and the confirmation of acceptance is signed, it is emailed directly to the buyer’s agent by the listing agent.
The deposit is commonly held in the trust account of the listing brokerage (RE/MAX Hallmark Pilon Group in this case) when received. The amount of these deposits vary, the APS indicates when the buyer will submit their deposit cheques.
Cheques are hand-delivered from the buyer’s agent to the listing agent along with the Purchase and Sale agreement.
The Real Deal
It is customary for the buyer to send the deposit electronically or for the buyer’s agent to deliver the deposit to the listing brokerage once the Purchase & Sale agreements are executed by both parties.
A Pre-Approval is a preliminary approval to obtain a mortgage. Buyers who plan to obtain a mortgage should provide this along with their offer.
Buyers are completely approved for their mortgage once they have a pre-approval and nothing can go wrong.
“PRE” is the key part of pre-approval to pay attention to. A buyer cannot apply for a full approval until they find a home. If buyers provide a pre-approval from a reputable mortgage broker and company, chances are they will be able to actually obtain the mortgage, as long as they don’t have a life change such as job loss, credit change, etc.
HOME INSPECTION CONDITION:
This is the period of time that buyers have to inspect the home and conduct their due diligence. The deadlines for inspections and type(s) of inspections to be conducted are illustrated within the APS and commonly written as “ due on or before (month, day , year)”.
Buyers cannot attempt to renegotiate or back out of the purchase following or as a result of an inspection.
Home inspections are part of the buyer’s “due diligence” period, they are meant to identify and/or address major safety and/or structural issues with a home. After their inspection(s), buyers, depending on the results, will have the option to present questions and/or requests to the Seller and/or attempt to renegotiate terms; withdraw their offer, or proceed with no requests or changes to the current agreement. If issues arise in the inspection and both parties are unable to come to an agreement, buyers do have the right to withdraw their offer and they are entitled to the return of their deposit. If this occurs, we will advise you accordingly depending on the circumstances.
Once the inspection stage is completed the buyers will issue a Notice of Fulfillment of Conditions or an Amendment to the Agreement of Purchase and Sale indicating they are releasing the inspection contingencies, either 1) with the following exceptions: (listing out the agreed-upon remedies), or 2) and are moving forward.
An appraisal is an evaluation of a home’s value conducted by a licensed appraiser that is hired by the buyer’s mortgage company. The purpose of an appraisal is to allow the lender to ensure that the home’s value is enough to warrant a mortgage in the amount that the buyer is seeking.
Buyers use this to get a lower price or it is another inspection.
Buyers have no control over the amount of the appraisal and it is not another inspection. Most of the time appraised values reflect the amount the buyer is willing to pay for the home. Appraisals sometimes come in too low; this is more apt to happen when there is a lack of comparable sales in the area. If the appraisal does happen to come in too low we will advise accordingly depending on circumstances.
A final walk-through term is often included in the APS, this is often scheduled by the buyer’s agent in the week prior the closing date to allow the buyers an opportunity to complete a visit before signing the closing papers. The goal is to ensure that the property’s condition hasn’t changed since the buyer’s last visit, any agreed upon repairs have been made and the agreed upon terms of the contract have been met.
The date on which the deed is executed and ownership is transferred to the buyers. Upon signing the buyer now is the new homeowner and funds are transferred immediately.
Seller can remain in the home after this date or schedule movers for the day of closing. This closing date can be easily changed after signing a contract.
The closing date is a firm date that cannot be altered unless there are unforeseen circumstances. Unforeseen circumstances could be classified as delays with the buyer’s financing or title issues that may prevent a seller from conveying “clear title”.