Negotiating a Contract

Once you have found the house that fits all of your needs you will have to make a formal offer to purchase. The offer to purchase is a form that set out the terms and conditions between the buyer and seller. The offer to purchase is the first step towards purchasing, once an offer is made by the purchaser and accepted by the seller legally you have to complete the purchase of the house.

If you are using a real estate agent he/she will have a standard offer to purchase form at their disposal. The standard form will cover most of the basic items involved in making the offer. However, this doesn’t stop you from adding things you think are important to the offer.

Contracts Usually Include:

• The name of the buyer(s). The names should appear as you want them to be on the deed (the paper that shows you are the owner) once you have paid off the mortgage.
• The name of the seller(s) as shown on the existing ownership document.
• A description of the property being purchased. As well as the address of the house it will reference a lot and plan number. This document shows the exact size and shape of the property you are purchasing.
• The purchase price, the price you are offering to the seller.
• The size of the deposit you are giving (to show that you are serious about buying the house) when making the offer.
• Conditions to the agreement. These are there to protect you. For example if you already own a house you usually make the offer conditional to you selling your existing home. That way you don’t end up making payments on two houses while you are selling yours. Offers made with conditions are less appealing to the seller than unconditional offers. So if two buyers are bidding on the same house the seller will be inclined to accept the unconditional offer.
• Chattels included. These are movable items such as stoves, refrigerators, washers and dryers that the seller may throw in to make the deal more appealing.
• Fixtures excluded. Fixtures are non movable items attached to the house. Sometimes the seller will want to remove an item (such as an elaborate lighting fixture) and will put this in the offer.
• A period of time (usually less than 48 hours) for both parties to respond to the offer. If no notification is forthcoming then the offer is considered invalid.
• The closing date. The date when you take position of the house and can move into it.

You may want to involve your lawyer when making the offer as it will become binding once accepted by the seller.

The negotiating process is usually completed quickly with realtors (if used) taking the offer to purchase forms back and forth between buyer and seller until an agreement is reached. The two major items to be agreed upon are:

1. The price. No surprise here; almost all other items can be resolved by adjusting the price up or down until a satisfactory agreement is reached.
2. The closing date. Buyers and sellers both have ideas on when they would like the closing date to be, often these are different, and the date has to be agreed on before the offer can be accepted.

With resale houses the offer to purchase is rarely done in one round. Once the first offer is presented to the seller he/she will usually counter asking for changes to the offer and sending it back to the purchaser. The purchaser can accept the counter offer or make additional changes and send it back to the seller. This continues until an offer is agreed upon or one of the parties fails to respond and the offer expires.