REAL ESTATE CORNER

Lynn and John Drewry

 

BUYING A HOME: ALMOST READY TO MAKE AN OFFER

 

Last week we wrote about GETTING READY TO BUY A HOME (see Web site www.lynnandjohn.ca and select “Articles”).  If you followed our advice you have done the following things:

 

1. You know your price range;

2. You have a ‘must have’ wish list and a ‘like to have’ wish list;

3. You have chosen an experienced real estate representative to work with;

4. You are prepared to invest the time to see houses with your ‘significant other’;

5. You know what you have to do to win if you are competing with other offers.

 

Now you have seen houses and narrowed your choice down to one or two. You have checked your wish list and are satisfied that your choice represents most of your wishes.

You are ready to evaluate the price.  Your sales representative will supply comparisons with other similar houses which have sold recently and will also recommend the market value of the house you have chosen.  You will then discuss negotiating strategy with your sales representative in terms of your opening offer.

 

At this point you should understand what closing costs and what cash flow you will require on completion of the agreement to purchase. If you have a house to sell you must consider whether to make your offer conditional on selling your home.  In today’s market many sellers are reluctant to accept an offer conditional on sale of a house. If your offer is in competition, this is probably not acceptable to the seller. An alternative is to consider a long closing date to provide plenty of time to sell your house. You might also consider whether you can acquire bridge financing if your house does not close in time to provide funds for your purchase.

 

Typical closing costs include:  legal fees on both the purchase and sale; title insurance; land transfer tax; moving costs; and municipal tax and utilities adjustments. Your sales representative can help you estimate closing costs.

 

You will also need a deposit.  The amount of the deposit varies considerably but a general rule is 3% to 5% of the price.  Substantial deposits provide a comfortable secure feeling for the seller who might be more flexible on other issues. Sometimes the deposit can be staged, for example, part at the acceptance of the offer and the balance when conditions are satisfied.  You are wise to make your deposit with a certified cheque because it can be returned immediately if your offer does not succeed.  If uncertified you must wait until your cheque clears the bank which might take anywhere from 10 to 30 days.

 

Next Week:  The third article of a series on:  Buying a Home-Everything You Want to Know:

What Conditions and Terms Should You Consider

 

Your questions, opinions and ideas for topics are welcome.  Phone us at: 905 873-0440.

 

Lynn and John are with Re/Max Realty Specialists Inc. Lynn is a Sales Representative entering her 10^th year in real estate. John is an Associate Broker and Chartered Accountant (FCA).