You’ve put your home up for sale, and received an offer. Fantastic! But now you need to go over the offer with a fine-tooth comb and ensure every item in the agreement is acceptable on your part. The last thing you want is to be bound by a contract that you’re not satisfied with, or simply does not meet your needs.
When evaluating offers, be sure to pay special attention to the following:
The first thing sellers will obviously look at is the offer price. The closer to asking price, the better. However, it’s important to keep in mind what comparable homes in your area have recently sold for in order to understand what a fair offer price would be. In fact, comparables should be studied before even listing a property in order to come up with an accurate asking price. The more accurate the listing price, the higher the odds of receiving an offer close to – or at – asking price – and in today’s market even above asking.
While the offer price is certainly one of the more important factors to consider when evaluating an offer on the table, there are plenty of other factors, including the closing date. This is the day that you hand over the keys in exchange for the money promised at the time of the offer acceptance.
For instance, if you’ve already bought another home that closes in 30 days, a closing date that is as close to that 30-day mark would be ideal. That way you don’t have to worry about bridging your mortgage if the dates overlap, or having to find a place to stay temporarily if the closing date on your current home is shorter than that of the home you bought.
This is the amount that a buyer hands over up front as a promise they are serious about buying your home. Ideally, this amount should be at least 5-10% of the purchase price of the property. The higher the amount, the more serious you can consider the buyer to be, especially if they show up with a certified cheque.
Take a look at the number and types of clauses included in the offer. It is standard for financing and home inspection clauses to be inserted into these agreements which help protect the buyer.
But other clauses can be a nuisance and prolong the closing of an agreement, such as a clause to have the buyer’s lawyer look over the agreement or a clause that makes the agreement dependent on the buyer being able to sell their own property. Make sure you’re OK with the clauses inserted. If not, there’s nothing wrong with crossing them off to see whether the buyer is willing to move forward without these specific contingencies.
Clause Expiry Dates
These are the dates that each clause needs to be met by. Each individual clause will have its own specific expiry date, which will help you gauge how long it will take before the deal will be able to close.
Real Estate Agent Commissions
Typically, it’s the seller that is responsible for paying the commissions to both the seller and buyer agents. The amount paid is split between the two. You obviously want to be clear about how much you are paying, which should have been discussed and negotiated before entering a purchase agreement.
There are plenty of factors that warrant attention in a purchase agreement. Luckily, your real estate agent will help you walk through the entire document and shed light on items that may require special attention, and even change certain factors to better suit your needs.