You may want to read the previous chapter on marketing your house in Toronto here.
Realtors® assists sellers in the bargaining process, provide advice and counselling as offers are received, and work through complex negotiations with buyers. Depending on your sale strategy, you might decide to ‘hold back’ all offers until a specific night; this can create a sense of urgency if the buyers have been kicking tires for a while. On the other hand, there is a risk that no offers will come in on the stated date, leaving the home to face yet another selling strategy later.
Offers, Counter-Offers, Conditions, and Other Bugaboos
Big money is involved, and big emotional investments are at stake for both the seller and the buyer. That’s a lot of pressure to be under when trying to decide whether to take an offer (a bird in the hand?), request changes to an offer, or just hold out for something better.
No less important than the emotional factors, a home sale by itself can be complex. There is a lot of legal jargon in a standard Agreement of Purchase and Sale. That’s why it’s important to understand (at least in layman’s terms) what it all means, and to know something about the market conditions you’re dealing with. Your Realtor® should be able to explain all this to you and let you know very honestly what alternatives are realistically available.
Photo by Wil Taylor
Here are some questions to keep in mind when trying to decide whether to accept an offer:
- Is the offer at or near the asking price? Is the offer above the asking price?
- Has the buyer buried any seller costs within wordy clauses and contract schedules? Have these been reflected in the offered price?
- What will it cost you not to accept this offer? Consider this in terms of mortgage payments, taxes and insurance you have to keep paying if your home sits unsold on the market.
- Do you have enough time to wait for other offers to come in, or do you have urgent plans of your own?
- If several offers have been received, should you choose the high but conditional offer from the purchaser who may not be able to arrange home financing, or a somewhat lesser offer from a buyer with pre-approved financing?
Let an experienced Realtor® help you decide.
Please remember that once you have signed a counter-offer, you cannot go back and accept the original offer or any other offer; you are committed to the one that is under consideration. In addition, if you accept an offer that contains a condition, you are agreeing to take your house off the market for a set time until the condition is either fulfilled or not. The buyers use that time in an attempt to meet the condition of the offer and are counting on you to sell them your house if they in fact succeed. This arrangement is binding because fulfilling the agreed condition might require great effort (or investment) on the part of the buyer. You might still potentially review other offers, but the pending, condition-dependent offer takes precedence unless the buyer backs out (or fails to fulfill the condition in the specified timespan).
Carefully consider counter-offers every time. Maintain a rational approach and don’t get swayed by emotions. Consulting your Realtor® will usually help you stay objective and reasonable.
Accepting Offers
Once you have received a satisfactory offer from a buyer and have accepted the contract … please accept our congratulations! If the offer is firm and you have a deposit in hand, you can relax. That is to say if there are no conditions, such as that the offer is contingent upon the buyer obtaining satisfactory financing, but rather when the deal is complete and fully executed. From this point on, you won’t have to open your home to strangers anymore or stress out wondering if your biggest asset is going to sell. You can focus on your plans for the future – which might include a home purchase of your own.
That said, the sale process not completely over; a series of inspections and checks can be required during the closing period to satisfy buyers and lenders. Your Realtor® can help you, the homeowner, complete the process by assisting with any requirements found in the sale agreement.
Photo by thinkpanama
Closing
Signing a sale agreement is not the end of the selling process. Some of the most complex aspects of a real estate transaction now begin; gratefully, most of them will be handled by professionals! Much of your agent’s work will be quiet and unseen: the mountains of paperwork and signatures that must be verified by all parties, from brokerage offices to lawyers; reporting procedures; de-constructing the marketing plan for your home. A good Realtor® will also let you know what is expected from your end and make sure you have all the information you need for a smooth closing.
Now is the time that any conditions in the offer you signed must be fulfilled or waived. This means that if the offer was conditional on the buyer obtaining satisfactory financing, the buyer must now prove to you that he or she has done so. If the offer was conditional on a home inspection coming back satisfactory to the buyer, that inspection must have taken place and if the buyer is satisfied, he or she must waive the condition.
Once all conditions are satisfied, the deal is firm and barring anything truly unusual, it will close on the date stipulated in the sale agreement. The buyer’s lender will, in most cases, still require a formal appraisal of the property, but this is in practice just a formality to establish the basic characteristics of the property.
Be sure to look at the sale agreement and review any of your obligations: Any alterations you agreed to do for the buyer before closing must be completed according to what is set out in the agreement.
Closing Day – What to Expect
Photo by Richard Gagat
Closings can occur within a month in some areas – at least in theory. In practice, it takes time to conduct inspections, locate replacement housing, contact movers, pack and actually move. You might want to give yourself – and the buyers – a little more time to get everything done; something to think about during offer negotiations!
Whatever you decided on then, you are legally bound to stick to now. If the date you initially agreed upon really doesn’t work for you, perhaps because you have since bought a new place with a conflicting/inconvenient closing date, you can ask your Realtor® to draw up an Amendment to the sale agreement. If the buyer goes for the date change, you are in luck and can adjust your plans accordingly. But it is up to the buyer at that point whether or not they agree to the change in the plan. Please be mindful of any last-minute Amendments, since the buyers may have already made arrangements to move in and they may need to vacate their previous dwelling by a certain deadline. If there are serious complications of this sort, consider offering the buyers temporary housing in your area until you can indeed let them move in. Include this in the draft of the Amendment and be courteous. Be sure that your buyers will be thankful to you for being courteous.
Your real estate lawyer should contact you to set up a meeting a couple of days before closing. At this meeting, you will sign off the mortgage, the legal papers, and hand over a set of keys which your lawyer will make available to the buyers on closing day. On the big day itself, your lawyer will let you know (usually later in the afternoon) that everything went smoothly and the money and keys have changed hands, and the buyers are now registered on title. Good job!
Now that you know how to deal with offers and close the deal, it is time to move out gracefully and get ready for the next challenges of life.
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