- What is a Buyer Representation Agreement and should I sign one?
- How does a buyer know if a property is listed at a fair price?
- How is the offer price determined?
- What happens when there are multiple offers on a property?
- What is a conditional offer?
- Is a home inspection required?
- What is the typical closing time frame?
- What is the usual deposit on an offer to purchase?
- Where is the offer deposit held?
- What is a Power of Sale property?
- What is an SPIS?
What is a Buyer Representation Agreement and should I sign one?
The Buyer Representation Agreement is a contract that was designed to protect the buyer’s best interests. Sellers have a listing contract that protect their interests. Recognizing the need to protect consumers, The Real Estate Council of Ontario (RECO), has mandated under their guiding principles that REALTORS® ask their clients to sign a Representation Agreement at the earliest possible time. Purchasers can choose to sign either a Buyer Representation Agreement or a Buyer Customer Service Agreement. The agreement signifies that the REALTOR®’s is committed and obligated to make his or her best efforts for the buyer.
How does a buyer know if a property is listed at a fair price?
One of the advantages of using a licensed REALTOR® is their access to comparable recent sales in the neighbourhood, which will help determine the true market value or whether a listing is overpriced.
How is the offer price determined?
There are a number of important factors including competing offers, amount of time the property has been on the market and a determination of comparative market value based on comparable properties sold. Data from properties that were listed but did not sell is also valuable as generally those properties were overpriced. Your REALTOR® will recommend a starting offer price that will begin the negotiation process. It is not uncommon for the process to involve one or more “counter offers” or sign backs, until an agreed-upon price is reached.
What happens when there are multiple offers on a property?
If multiple offers are received on a listed property, there often follows a “bidding war”. This means that several parties are interested, and more than likely the final selling price will be elevated from what it would have been if there were only a single offer, and it is not uncommon to go above the listed price. If you must compete with other buyers, be prepared to pay more and perhaps to be disappointed. There will be only one successful buyer and the vendor will consider price, conditions in the offer, closing date, etc. to determine which one is most advantageous.
What is a conditional offer?
A condition inserted into the offer means that the contract will not be firm and binding until certain things are fulfilled or waived. These include conditions related to financing, home inspections, the sale of your current property, etc. Conditional offers are considered less desirable than firm offers, but they are no less valid. It is important that your interests be protected. If you are able to sell your home in advance of purchasing, thereby eliminating the need for a condition related to the sale of a property, you will have a stronger negotiating advantage
Is a home inspection required?
It is good practice to include a condition in the offer to purchase that allows the purchaser to arrange for a home inspection, if the seller has not had one recently completed. Should there be serious deficiencies, it provides a means to terminate the offer.
What is the typical closing time frame?
Most closings are from 30-60 days from the date of acceptance of the offer. Some sellers, particularly those whose properties are vacant, are generally looking for shorter closing dates, whereas families that may require more time to settle their children in new school districts may be looking for closings that coincide with summer vacation or winter or spring breaks.
What is the usual deposit on an offer to purchase?
Offer deposits are generally 5% of the offer price, rounded up. The larger the deposit, the more serious and confident you are seen to be to prospective sellers. This can be particularly advantageous if there are multiple offers.
Where is the offer deposit held?
Your deposit is held in the listing brokerage’s trust account until closing. At that time, it will be applied towards the purchase price of the property. If an interest bearing clause was part of your original offer, you may be entitled to the interest accrued on the deposit once the property has closed. If the offer is unsuccessful, the deposit is returned to you.
What is a Power of Sale property?
Sometimes homes are listed as ‘Power of sale’, which means the mortgage holder has obtained the right to sell the home and retain the proceeds when a mortgage is in default. These homes are listed at current market value, athough there may be a little more opportunity to negotiate.
What is an SPIS?
An SPIS is a Seller Property Information Statement. It is an optional form that sellers can fill out when listing their homes. The seller warrants as to certain information pertaining to their home, such as their knowledge of any structural problems, details on mechanical systems and upgrades etc. If you are interested in a specific property, be sure to ask if an SPIS is available.