First-Time Homebuyer Guide: Making an Offer
Finding a home that feels right is an exciting moment. But before you can call it your own, you need to prepare an offer that reflects the property’s value and protects your interests as a buyer.
Your real estate agent can help you evaluate the property, understand current market conditions, and determine how the different parts of an offer may affect your purchase.
Understand the Three Key Parts of an Offer
An offer generally includes three important components: price, terms, and conditions.
Price
The price you offer should be supported by the current market.
Your agent can prepare a comparative market analysis using recently sold properties that are similar to the home you want to purchase. Factors such as location, size, condition, features, and amenities can help establish a reasonable market comparison.
Looking at comparable properties gives you a stronger foundation for determining how much you are comfortable offering.
Terms
Price is not the only part of an offer that can be negotiated.
Other terms can include the closing date, items that remain with the property, and other responsibilities or arrangements between the buyer and seller.
In Canada, closing costs are generally the buyer’s responsibility, so it is important to understand these expenses when planning your purchase.
Your agent can explain the terms that may be appropriate for your situation and help you understand how different requests could affect the strength of your offer.
Conditions
Conditions, sometimes referred to as contingencies in other markets, can provide important protections for a buyer.
Depending on the circumstances, an offer may include conditions related to:
- Home inspection
- Financing or mortgage approval
- Appraisal
- Other matters that need to be satisfied before the purchase becomes firm
The specific conditions included in an offer should be discussed with your real estate and legal professionals.
Negotiating the Offer
Once your agent submits your offer, the seller can accept it, reject it, or respond with a counteroffer.
A counteroffer may change the price, closing date, included items, or other terms. Your agent can communicate with the seller’s representative and help you understand the implications of each proposed change.
Negotiation is not simply about achieving the lowest possible price. A successful agreement should balance price, terms, conditions, and the circumstances of both parties.
Once both sides agree and the appropriate documents are signed, the transaction can move forward.
Complete Your Due Diligence
A home inspection is an important part of the buying process. It can reveal issues that may not be obvious during a normal showing and give you a better understanding of the property’s condition.
Before arranging an inspection, review the seller’s disclosure or seller’s property information sheet, where applicable. This information can provide insight into the seller’s knowledge of the property’s condition and any known issues.
If possible, attend the inspection and take the opportunity to ask questions. Once you receive the inspection report, review the findings carefully with your agent.
If significant issues are identified, you may be able to negotiate repairs or other adjustments with the seller, depending on the terms and conditions of your agreement.
After the inspection and negotiations are completed, the transaction can move toward the final stages, including the necessary legal, financing, appraisal, and closing requirements.