An offer you can refuse
Assuming you've priced your house near the fair market value and your real estate agent is diligently spreading the word, you should expect to receive an offer (or even multiple offers, in a perfect world).
Offers arrive by way of a legal document called the Offer to Purchase. The Offer to Purchase specifies the price the buyer is willing to pay, details about the property and financing, as well as any conditions, exclusions or inclusions the buyer wants to be contingent on the closing. Typically it is presented to your real estate agent by the buyer's agent and he/she will then present it to you. The offer can be firm or conditional:
Firm offer to purchase: This is usually preferable to the seller, because it means that the buyer is prepared to purchase the home without any conditions. If you accept the offer, congratulations! Your house is sold.
Conditional offer to purchase: This means that the buyer has placed one or more conditions on the purchase. Common conditions make the completion of the sale subject to a clean home inspection, subject to financing approval, or subject to the sale of the buyer's existing home. The house is not sold until all the conditions have been met.
Be sure to review the purchase offer carefully, and make sure you understand and agree to all the terms before you sign. This is an area where you should bring in a real estate lawyer (or notary in Quebec) to ensure your best interests are protected before you sign. It's important to note that a signed offer is a binding contract.
Some of the elements that make up an offer to purchase:
This is the total price offered and the financing details. The buyer may arrange their own financing or ask to assume your mortgage, especially if it has an attractive interest rate.
The deposit shows good faith on the part of the buyer and will be applied against the purchase of the house when the sale closes. The amount varies but, typically, the higher the price of the property, the higher the deposit should be.
Conditions are items that must be completed or fulfilled prior to the closing (such as a satisfactory home inspection, obtaining financing, or selling the buyer's existing house). The buyer will list anything they want you to pay for: carpet cleaning, warranties and repairs, credits for damages, and so on.
4. Inclusions and exclusions
The offer may be contingent on certain items being either included or excluded in the sale. This may include anything from appliances to decorative items, such as window coverings or mirrors (these are called chattels in legalese).
5. Closing day (or possession date)
In Canadian real estate transactions, the closing day is generally the day the title of the property is legally transferred and the transaction of funds finalized, unless otherwise specified (except in Manitoba and Quebec).
If there are terms in the buyer's offer to purchase that you don't agree with, you may choose to make a counter offer (or even outright reject the buyer's offer). Often the seller and buyer will have to negotiate to arrive at terms that both parties find agreeable.
When the negotiations are complete and all the terms are agreed upon, the buyer's agent usually prepares a copy of the agreement of purchase and sale showing only the final terms. Once this process is complete, you and your real estate lawyer (or notary) should review the offer to see that its terms are stated exactly as you wish before you sign it.
Careful attention to detail and consideration of the buyer's point of view should result in a happy outcome.