Buying My First Home
Is a very big dicision and can be stressful. To help you elemenate s';ome of that stress as a Real Estate Agent, I will walk you through each process taking the time to explain in details.
Here are
Steps
- Decision Once you have found the house or condo you want to buy, you need to decide the terms and conditions of what you want to offer the Seller (price, closing date, conditions, etc.) We, together will determine a fair price by evaluating the current market comparable as well as recent sold prices before writing the offer.
- Agreement of Purchase and Sale (APS) There is a ton of paperwork to sign, most importantly, the Agreement of Purchase and Sale – it’s your official offer to the Seller. There are other forms that will accompany this offer base on a case by case scenario and those forms will be explained at the time of signing the offer. The APS includes clauses, definitions and conditions to help explain and protect the parties within. There are three conditions typically included a) Financing where you receive a commitment letter from your lender whos agreed to give you a mortgage. b) Home inspection where you will receive a home inspection report from a home inspector and we need to go through this together to identify any major problems within or around the home. c) Status Certificate (applicable to condos) where you and your lawyer should go through and review the condo bylaws (rules), financial statements (how they handle the moneies eg. Maintenance fee from owners, etc. These conditions are placed into the APS to protect the Buyers.
All these conditions have a deadline which will be indicated in the APS. You will need to let me know when each condition has been approved. Once I get the OK, you will be signing forms to indicate that these conditions have been fulfilled (good to go). Once we say that these conditions are fulfilled, the deal becomes “FIRM”. On a side note, I typically ask my clients to provide a brief summary about themselves to introduce to the Sellers and build rapport that accompany the offer. This works.
- Irrevocable Period Your offer is only valid for a certain amount of time – we call this the irrevocable period –this is the time period that the Seller has to consider your offer. After the irrevocable period has expired, if the Seller hasn’t accepted your offer (or made a counter-offer), your offer is null and void and you aren’t committed to it any more. Irrevocable periods vary, but I have seen everything from one hour to 72 hours. Typically in a hot real estate market (like Toronto’s), offers are valid for only a few hours, so the whole process could happen very quickly once the offer is signed. I would recommend up to 24 hours or less so that other offers don’t come in while your offer is being considered. considered.
- Offer Registration Once signed, your I will ‘register’ the offer with the Selling agent’s office (the Listing Brokerage) – essentially telling the office that they have a signed offer from a Buyer. None of the terms, conditions or price are revealed to anyone at this point. Realtors register offers so that there is an easy and fair way to track offers–especially important if there are multiple offers on one house or condo. We want to know how many registered offers there are on the property, as this will provide us an idea of where we stand. If there are other offers, known as multiple offers, then we have less of an advantage of negotiating our terms. If you are the only one offer on the property, and we see that the property has sat on the market for a while (4 weeks or more) then we can try and negotiate a better deal for you.
5. Offer Presentation The real estate agents for both the Buyer and the Seller generally make plans for an offer presentation – either in person (at the subject house or condo or at the Listing Broker’s office) or by fax or e-mail. The Buyer’s real estate agent (me) presents the offer to the Seller and his/her real estate agent together. The Buyers are not generally present for this part (though it’s a good idea to be available via phone or text during the negotiations so that if they counter or accept the offer, I can have you sign the acceptance before the irrevocable time). The irrevocable time can change by the Seller from when the Buyer had first inputted his/her time. For example of the Seller counters the offer, the Seller can change the irrevocable time to be either earlier or later then what you had previously put. This is why it is important for you to be available during the negotiation (before the irrevocable time).
- Negotiations The Seller can now do one of 3 things with the offer:
- Accept the offer as is They agree to the terms and conditions you’ve offered and sign it. Congrats!
- Sign back the offer with different proposed terms (for example, at a higher asking price, with different closing date, etc.). This now becomes a counter-offer from the Seller back to the Buyer. This is the most common scenario–usually a number of back-and forth negotiations take place with each side making concessions until hopefully a mutually agreeable contract is reached.
- Decline the offer If your offer is totally unacceptable to the Seller, they have the option of simply declining it–no negotiation, no anything. We’ve seen Sellers decline low-ball first offers, and we’ve seen offers declined mid-negotiation.
If an accepted Agreement of Purchase and Sale is reached, the Buyer will need to provide a deposit (in trust) to the Listing Broker (usually around 5% of the purchase price and usually paid within 24 hours of the agreement being reached). Any conditions (for example, a financing condition or home inspection condition) then will need to be met (by the time indicated in the Agreement of Purchase and Sale) before the agreement is considered “Firm.” If there aren’t any conditions, the agreement is firm as soon as the agreement is signed and deposit paid. Yay! You now own a new home.
With an accepted offer, I will ask for your Lawyer and Mortgage Agents’ contacts. They will ask for a copy of the Agreement of Purchase and Sale + MLS listing Sheet.
It’s better to have these guys ready because they have their own procedures and steps.
For example, you will need a Lawyer to review the status certificate before removing that condition.
- Closing Date This is the date you will receive the keys from either myself, your lawyer or the Sellers. This is now your home and you can start moving your things in.
Making an offer on a house or condo is an exciting but crucial (and often stressful) part of the process. I’ll preparing you for potential scenarios ahead of time, helping choose a strategy, guiding you through the process and advising you of your options (and possible outcomes) at each step.