When you walk into your dream home, you just know it’s the one for you! Often the excitement this brings can lead to your heart ruling your head as emotions take hold. It can be tempting to sign on the dotted line there and then – no matter the cost!
BUT, before you make an offer on a house, it’s essential you know what you’re getting yourself into. An offer is a legally binding contract and once it’s been accepted there’s no backing out of it. Pace yourself and be sure you’re ready – read on to see exactly what you need to know!
Making Sure You Have the Funds
The first step all house hunters should take before they even browse for properties is to get their finances in order. By obtaining a pre-approved mortgage you know exactly what you can work with and are in a strong position to make an offer you can actually afford.
This can be a real benefit in a hot market, as you will have already determined that you’ll be eligible for the required loan and can make an offer with confidence. Without knowing what you can afford, you might well make an offer but not be approved for the loan, leaving you in a sticky situation.
It’s also advisable to have the deposit ready to transfer as soon as the offer is accepted. Be sure to factor in the additional closing costs such as real estate agent and lawyer fees, land transfer tax, inspection charges and any other hidden costs.
Adding up Your Offer
Hiring the services of a good real estate agent can be a real help when calculating your offer, as they’ll have a better insight into the current market. Your offer should be based on factors such as how much similar properties in the area have sold for recently, as well as the location and condition of the home. With the help of a real estate agent, you’ll be more able to make a reasonable offer that works for you and the seller.
Creating a Watertight Contract
Once you’ve arrived at the figure you’d like to offer, it’s essential that you know exactly what is in the purchase contract. As already mentioned, if your offer is accepted it becomes a legally binding contract that you can no longer walk away from. However, your offer may not be accepted outright and normally the seller will make a counteroffer. It’s not uncommon to go back and forth until you reach an arrangement that suits both parties.
With an agreement in place, make sure all the details are written in the contract. Spoken promises won’t hold up in court, but anything written must be honored. It’s well worth hiring the services of a lawyer at this stage or asking your real estate agent to help you go through the contract. Pay attention to what is included in the sale, such as fixtures and chattels (things like appliances that aren’t fixed) – otherwise, you might walk into your new home and find it completely bare!
As a buyer, you’re free to make a conditional offer, which gives you a little wiggle room. If certain conditions aren’t met, you won’t be legally bound to your offer. Typical conditions include the buyer obtaining the required finance and a satisfactory report from a home inspector. If both conditions are met the purchase can go ahead, if not, the buyer is free to walk away. You’re free to add as many conditions as you like, just be advised that sellers generally favor offers with fewer conditions.
Taking Extra Precautions
It’s well worth asking your lawyer to carry out a title search through the registry office. In doing so, they may discover easements, mortgages, and restrictions held by the current owner that could be problematic when it comes to you buying the property. They can also carry out off-title searches to check for unpaid bills and taxes – things that may be transferred to you when you buy the house.
Having a home inspection carried out also covers you for problems further down the line. Finally, be sure that your deposit is paid into a trusted escrow account rather than directly to the seller. This provides additional security as the seller may spend the deposit before the deal is complete, potentially leading to huge delays and unneeded stress.
Before making an offer, buyers should understand the implications of doing so. Only make an offer if you seriously want to buy the property and are able to do so. A well calculated conditional offer provides leeway, and with your finances in check, plus the services of a good lawyer and real estate agent, your offer is more likely to be accepted.