You’ve seen the home and you love it. Now comes the hard part: making the final decision.
You may feel sure you want to buy the home, but you may still find yourself plagued with nagging questions. How can you be certain you can afford it? What will you need to do to get ready to place an offer?
Let’s face it, offer day is a time when you can least afford to make a mistake.
Assuming you have a few days between viewing the home and the day offers are expected by the seller, you will want to make the most of that time. Walking into a bidding war without having your ducks in a row could be costly, both emotionally and financially.
It can be nerve-wracking as you wrestle with the unknowns but take heart. Provided you set up a few key elements in advance, it is possible to go into offer day with confidence.
Here are five the things you'll want to consider as you decide whether you are ready to place an offer on a property.
How much do you want to offer?
Experienced realtors will tell you the price range you’re likely to face on offer day. For example, they may say the price could go all the way up to a certain threshold. However, it can always go higher, depending on the number of buyers interested.
When you are deciding on your offer amount, we always recommend going in with your best offer first. This is because the seller may simply choose the highest bid, leaving you no opportunity to improve the offer if necessary.
One final way of doing a gut-check on your decided offer amount is to imagine someone else coming in and paying $1000 more than your highest offer. If you're okay with that, then you’ve truly reached your maximum threshold.
This is not just a hypothetical by the way. We’ve had clients lose properties for $1000. Sometimes the bidding can be that close.
How much will your deposit be?
When we place an offer on a property, we must indicate how much of a deposit we are giving. This is usually around 5% of the offer price, but you can go higher if it's within your means, or if the purchase price is over $1M.
For a seller, the deposit indicates the level of seriousness of the buyer.
When will your closing date be?
If the property is vacant, the seller may want to close earlier rather than later, but along with everything else this can be negotiated.
Give some thought to what your ideal closing date is, understanding that you will likely need to give 60 days notice to your current landlord if you’re renting (otherwise you may forfeit your final month deposit).
Status Certificate or Home Inspection
If you think you may want to offer on the home, have a lawyer review the status certificate before the offer date. This will allow you to go into the offer process with a minimum of conditions, which is ideal.
If the home you are considering is freehold (i.e. not a condo), speak with your REALTOR® about the availability of a home inspection report. Sellers will sometimes have a home inspection performed prior to listing so they can have it available for potential buyers.
This allows buyers to feel confident in the home without having to include a home inspection condition, which could put them at a disadvantage in competition.
Are you confident enough in the arrangements made with your lender that you would feel comfortable making an offer without a financing condition?
We recommend chatting with your lender in the days preceding offer day to ensure you have this locked in. In competition, a seller will prioritize a "clean" offer (one with no conditions) over an offer that has conditions. That’s because a clean offer equals a firm sale.
In this market, we recommend clients protect themselves in advance of an offer by ensuring the financing is rock solid beforehand. If you are not 100% certain, we recommend including a short financing condition so you can do the proper due diligence.
By setting up these key elements in advance, you can make a fully informed decision about whether or not to buy the home. If you do decide to take the leap, you can then embark on offer day with complete confidence.
If you are searching for a home and would like further guidance, reach out to us today.***
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