So you have finally found the perfect property. Maybe it’s an investment property, a new home, or a family cottage. Various factors will influence what you decide to offer. However, the process is always fairly similar.
A wide variety of information is needed to complete an agreement of purchase and sale. You will need to decide on a closing date, deposit amount, and chattels or fixtures to include, but perhaps the most important decision will be “How much should I offer?”. You should consider as much available data as possible before making that decision.
What Does Offer Paperwork Look Like?
Before we get to that, what else do we need to know to fill out an agreement of purchase and sale?
Below you can see the first few pages of a standard Ontario Real Estate Association agreement of purchase and sale. As you can see, just in these first few pages, we have a lot of details we need to finalize.
On the top half of page one, you will need to decide on an offer and deposit amount. The rest of the page is legal names, addresses, dates, etc.
Clause By Clause
Starting at the bottom of Page 1.
- Irrevocability – This is the decision timeline. You are either making an offer or receiving an offer. A decision needs to be made by this date and time.
- Completion Date – This is more commonly known as the “Closing Date,” i.e. when you take possession
- Notices – How documents may be transmitted between parties to the agreement
- Chattels Included – What do you want to be included with the purchase? Common items would be kitchen and laundry appliances.
- Fixtures Excluded – If the sellers want a fixture of the house to be excluded, they must specify it. Otherwise, all fixtures are deemed part of the property. A common example would be a chandelier.
- Rental Items – Is anything in the home being rented? Water Heater? Furnace?
These are the main clauses that require you to make some choices.
On a condo agreement, you would also have a section outlining the condo payment details and condo amenities.
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- Standard Ontario – Agreement Of Purchase & Sale
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- Standard Ontario – Agreement Of Purchase & Sale
Do Not Forget The Conditions
Another key element of any offer will be what conditions you want to include and how long they should last.
You would likely include a home inspection and financing condition for residential property with 5 to 7 business days to fulfil these conditions.
For a condo purchase, you would also have a 10-day condition to review the condominium documents.
Commercial deals can have conditions that stretch out over several months.
Below is a standard “Schedule A” for a commercial deal, with just some of the conditions included.
Standard Ontario – Schedule A
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How Much Should You Offer?
Finally, let’s get to the important part. What should you offer?
The first step in making this decision is compiling all the necessary data.
This should include the following:
- Confirmation from your bank/mortgage broker on what you can spend
- General neighbourhood sales data
- Specific sales data for the type of property you are buying
- Market data for the entire region
- Confirmation of access to the downpayment for the amount you are going to offer
- Full agreement between your partners, spouse, friends, and whoever you are doing the deal with.
Your Realtor can provide you with very specific or broad market data. Data on the current market can also be found on the LSTAR website here: Market Data
You can get more general Ontario real estate market data from CREA here: Ontario Market Data
Once you have all this data, you need to make sure you are actually taking it into consideration.
If all the two-storey homes in an area sell for $700,000, you shouldn’t be paying $1,000,000 for a similar property. This logic extends to all condos in an area or duplexes etc.
Sometimes you need to ask for a greater depth of data. Do not be afraid to ask for six months or a year’s worth of comparables.
In Summary
So, what should you offer? The answer is simple. What You Are Comfortable With.
The key information we offer our clients is that we cannot spend your money for you.
We can provide anecdotal market-based opinions, historic market data and offer you insight based on experience. We can not force you to make an offer you are not comfortable with.
If someone is doing that, you should end that association immediately.
Happy House Hunting & Selling
Want more details on the current market? You can find more information about the current market here: London & St Thomas Association of Realtors.
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Want more details on the current market? You can find more information about the current market here: London & St Thomas Association of Realtors.