Genworth Financial - On your terms
A Better Way to Homeownership

Brenda Bouw
One of the most stressful things about homebuying is making your first offer. Brenda Bouw, journalist and author of Homegirl: The Single Women's Guide to Buying Real Estate in Canada will help ease your mind by preparing you to make your first home offer.

Making the Offer
By Brenda Bouw

Before you Bid
Before you go asking for that home you want, make sure you are preapproved for a mortgage. Preapproved makes you a more attractive buyer, and means you haven't wasted people's time (including your own) if you find out you cannot get the loan.

Put It in Writing
Offers contain a lot of legal clauses and contingencies to protect both the buyer and the seller. Some of the basic items you need to put in the offer include:
 
  • The price you are willing to pay.
  • Conditions you need met such as financing, home inspection, updated survey, etc.
  • What you want included in the sale (for example, appliances, curtains and blinds, light fixtures).
  • Amount of deposit.
  • Closing date

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What Price Should you Offer?
You know what the seller is asking, but what price do you want to offer? How do you determine that number? Your agent will help you with this by looking at a few factors:

Recent Sales
First, your agent will look at recent sales of similar properties in the area. Knowing how much a similar home sold for helps you determine what price you should pay, and likely what price the seller is expecting.

Condition of the Home
The structural condition of the property is important, such as a sound factor, walls and ceilings that aren't cracked or show water damage, floors that don't resemble a Tilt-a-Whirl, and windows and doors that close. Carefully check the workmanship of any improvements that have been made to the home - for example, newer kitchens and bathrooms or renovated basements.

Market Conditions
If the market is hot, it's defined as a "seller's market". In this type of market, properties can sell fast. It's a "buyer's market" when real estate sales are slow. Your agent will look at the current market conditions to help you decide what price is best.

Getting to Know the Seller
Finally, the agent considers how motivated the seller is to unload the property. The most common motivated seller is someone who is relocating to another area and has purchased a home in their new town or city. They want to sell quickly to avoid carrying two mortgages at once. Knowing a fact like this can give you an advantage when negotiating the price and other factors in the sale.

Terms and Conditions of the Sale
Price is arguably the most important part of the offer, but you might want to add some conditions to the offer. You should know, though, that having too many conditions can sour a sale, especially if you are in a bidding war for the property. In that case, the fewer conditions you attach to the offer, the better. That said, some of the most common conditions in an offer to purchase include:
 
  • Financing
  • Home Inspection
  • The sale of your current home
  • Legal review of purchase agreement
  • Updated land survey
  • Access visits

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The Deposit
You want to put down enough money to show you are interested in buying the home, but how do you know how much is enough?
While there is no rule on how much to put down, the standard is about 5 to 10 percent of the purchase price. If you back out of the offer after it has been accepted, you will likely lose this deposit to the seller. You may also face legal action. This is why it's critical that you are 100 percent sure you are ready to make the offer before you sign the dotted line.

Closing Date
Now, there is one more item to carefully consider before presenting the offer to buy that home: "closing time." It takes more than simply picking the date when you want to be living in your new home. Things to consider include your current living situation (for example, how much notice do you have to give your landlord?), how much stuff do you have, moving dates and how the closing process is handled - your lawyer will need enough time to get all the paperwork in order. Avoid a common mistake of first-time homebuyers: don't set the closing date for the same day as your moving date.

Presenting the Offer
It's time to present it to the seller. Your agent will do this on your behalf. The process will either be quick and painless, if the offer is immediately accepted, or it can turn into a long evening of back and forth negotiation.

Offers and Counter-Offers
Counter-offers are common in home sales. Your original offer is the first step in the negotiation process. The transaction will usually go one of four ways:
  1. You make the offer. Offer is accepted. You just bought yourself a new home!
  2. You make the offer. Seller makes a counter-offer, asking for a higher price and/or different terms. You sign the offer back (once, or more times if necessary) and agree to some or all of the terms. The vendor accepts your counter-offer. You have a deal!
  3. You make the offer. The seller counters. You reject the counter-offer and decide not to make a subsequent offer. The deal is off.
  4. It's a bidding war. You make the offer. The house is sold to a higher bidder. You move on. After all, there are other houses.
The agreement isn't final though until you've signed the papers. Once that's done - congratulations! You're a homeowner. Pat yourself on the back for surviving some of the most stressful stages of homebuying.

Ask your mortgage professional for a Genworth-insured mortgage today,
or call 1-800-511-8888