Kurt Woock
Beth Buczynski
An offer is a legally binding contract that details the price you’re willing to pay for a piece of real estate and any conditions that must be met in order for the deal to go through.
Each offer is different and you might have to present multiple offers to secure the property you want.
When both the buyer and seller sign off on the terms of the offer, the agreement of purchase and sale is formally completed, and the closing process can begin.
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What’s in an offer?
You’ll work with your real estate agent to submit an offer to the seller. A typical offer specifies the following:
- Your information. This includes the legal names of the buyers and the address of the property for sale.
- The price. How much you’re willing to pay for the house. This includes the down payment and the mortgage amount.
- Deposit. A deposit is money you’re willing to put up as soon as an offer is accepted but before the deal closes. It shows the buyer that you’re serious. If the offer goes through to completion, it’s considered part of the down payment amount. A common deposit amount is 5% of the purchase price, though a higher amount could be one way to convince a seller to accept your offer over others. If you back out of the deal, there are some instances in which you get the deposit back; work with your agent to clarify what the terms of your offer are.
- Items to be included. Generally, you can expect that readily removable things are not included in the sale while things that are permanently affixed probably are. For example, you wouldn’t expect a microwave on the countertop to be part of the sale, but a microwave that’s installed above a stove would likely be included. In either case, you’ll want to specify these details in the offer.
Nerdy Tip: If there’s something you’d like the sellers to leave behind — a pool table in the basement, a custom patio set that fits the space perfectly — you can always ask!
- Land survey request. This step is optional, but is helpful in confirming the size of the property, and any easements or rights-of-way that could affect how you use it.
- Closing date. This is the day when you want to take possession of the home, often 60-90 days after the offer is accepted. In some instances, the seller may want to negotiate a leaseback, in which the seller stays in the home past the closing date and pays rent to the buyer.
Nerdy Tip: If you’re not on a tight timeline and you’re in a competitive market, you might let the seller know you’re flexible; it could make your offer stand out. One seller may want to close the deal as quickly as possible while another may want extra time to move out.
- The date the offer expires. The expiry date is often 24 to 48 hours from the time you put in the offer, but could be even less time in a hot market.
- Add conditions. If you want certain stipulations met before the contract is finalised, such as a satisfactory home inspection report or for your current house to be under contract as well, they must be listed clearly in the offer. More on this below.
- Submit your offer. Your real estate agent will include all of this information in the offer for you, and in most cases, they’ll have you sign the document digitally. Then, your agent will present the offer to the seller’s agent.
Note that putting in an offer to buy a new-build or pre-construction house could involve different or additional steps.
Decide on your conditions
Conditions are arguably the most essential part of any offer aside from the purchase price. That’s because conditions give you, the buyer, a chance to back out of the agreement if they’re not met.
Common conditions include:
- Financing condition. This stipulates that the buyer must be able to obtain a mortgage for the amount they need and under terms they’re happy with. Remember: Even if you were pre-approved for a mortgage, you still need to go through a formal application process.
- Subject to inspection. Many buyers will insist on a home inspection to finalise the offer. A home inspection can reveal whether any major repairs are needed. Including a home inspection condition may allow you to renegotiate a lower sale price to account for repairs or back out of the deal entirely.
- Subject to legal review. If buying a condo, you and your lawyer will want to review the legal documents to ensure the reserve fund, status certificate, budget and other legal documents are acceptable.
- Home sale. This contingency allows buyers a certain amount of time to sell their current home, if applicable, before they’re required to complete the purchase transaction.
Technically speaking, if any of the conditions aren’t met, the buyer can pull out of the contract without fear of losing their deposit. At first glance, including conditions seems obvious since it gives the buyers an easy out.
However, sellers can always choose to reject offers that come with a lot of conditions. In a hot real estate market, it’s common for buyers to limit their conditions or make an offer without any conditions at all. The choice of what conditions to include or waive should be made with input from your real estate agent to ensure a positive outcome.
Tips for making a strong offer
Offering to pay well above the asking price will probably grab the seller’s attention. But there are a few non-monetary ways to make your offer more attractive to the seller:
- Get pre-approved for a mortgage. This is proof that a lender has already vouched for the amount you’ve offered.
- Have a strong down payment. This is another way to signal that financing the purchase won’t be an issue as lenders look favorably on larger down payments.
- Jump to the front of the line. Consider a ‘bully offer’ where you make a bid before the formal offer date. If you’re going to do this, be prepared to make an offer enough above the seller’s asking price that they’re willing to forego considering
- Limit the number of conditions. You take on some risk here — waiving the inspection, for example, could lead to unexpected expensive repairs — but it lowers the risk for the seller, which could be a selling point.
- Offer a flexible closing. This could mean a quick closing, an extended closing date or even a leaseback.
» MORE: Use our mortgage affordability calculator to set your budget.
What to expect after making an offer
Once you make an offer, the seller can choose to:
- Accept it.
- Make a counteroffer.
- Decline it.
- Ask for a revised (higher) offer. A seller with multiple offers may ask for a “best and final” offer from all parties.
If your offer is accepted, congratulations, you just bought a home! Now you just need to get everything in place for closing.
If your offer is declined, you could technically put in another offer, but you’ll likely want to look into why your offer was rejected in the first place. It’s possible that the seller is looking for a higher price, fewer conditions or faster closing.
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