Making your offer to purchase
The fun begins! This is an exciting part in the process!
You found your new home, in your perfect neighborhood. You can picture yourself in the house, raising your family, relaxing in your yard enjoying the smells of a BBQ.
Now it’s time to make an offer for your new home.
I cannot stress this next point enough; use a professional realtor to help you make your offer.
I am not a realtor, but as a mortgage broker I have witnessed many deals go bad due to folks trying to do everything on their own. I have some sad stories that resulted in lawsuits and lost dreams and lost money.
There is no cost to have a realtor represent you on a purchase. In Canada the seller is responsible for paying the selling commissions. This means you have no cost to use a realtor when buying a new home only when selling a home.
Find a professional one and try working with that one person. Having multiple realtors is not needed as the professionals have access to the Multiple Listing Service and they can find every listing in your area that fits you requirements.
Realtors will protect your interests and can negotiate for you on your behalf. They can also refer you to other professionals that you will need, such as a lawyer, home Inspector or appraiser. Let them do what they do best.
Prepare yourself for the process
Once you make an offer things will move fast, very fast.
You will always add a term or condition that states you have 5 to 7 working days to get your financing approved and in place. This is a standard term with all offers. You should always have this written into your offer to purchase.
You may also want a home inspection or appraisal so you will want to have these conditions or terms written into the offer. The next chapter will cover those in detail.
These terms or conditions provide you time to get things done. The financing takes time so you always want this in your offer. If the house is older than 3 to 5 years you will want to get an inspection to ensure all is good with the house.
Now it’s time to get the paperwork submitted.
As a mortgage broker I inform my clients of the paperwork needed on all pre-approvals and approvals. Once they are pre-approved I send a list of all the paperwork that will be required to complete their new mortgage.
In some cases the lenders may ask for something we did not predict but most deals require the same type of paperwork. My team tries to prepare our clients as best we can for all requests.
If you are self-employed, I always ask for the tax information up front before submitting for a pre-approval. I need to confirm the income the lenders and mortgage insurers will allow us to use from your personal tax returns.
We don’t want you wasting your time so it is best to always confirm self-employed clients income upfront.
In some cases we do this with new employed people. The reason for this is to confirm if there is a probation period and how long it may be for.
Taking these steps up front ensures you will be aware of everything you will need to complete your new mortgage.
You have made your offer, now what?
Your realtor makes the offer to the seller or the seller’s realtor. They normally have 24 to 48 hours to review and accept or decline or counter offer. If they make a counter offer, you are normally given the same time period to consider your next move.
Once your offer has been accepted in writing you are now on the clock. You have normally 5 to 7 days to get your paperwork reviewed by the lender.
The lender will submit the deal to a mortgage insurer if you are putting down less than 20% as they need that approval. This can take one to two days.
Your broker or lender will then submit the paperwork for review and confirmation. The lender will confirm your employment and review everything.
Any questions or concerns will be relayed to you through the broker or lender. They will let you know if you require any more paperwork.
Once all the paperwork is reviewed and confirmed you will be given a green light to remove your financing conditions. Your realtor will have you sign a waiver to this and present it to the seller’s realtor or representative.
Some offers will require you pu
t down a larger deposit once you remove your financing conditions; this will be the time to do so.
Your Deposit is now at risk!
Once you remove your conditions or terms of the deal and provide a signed waiver to this effect your deposit is now at risk if you should fail to complete the purchase of the home.
If you back out of the deal you can lose this deposit and possibly be sued if the seller has any losses on the future sale of their home.
Always ensure all your conditions are met before waiving your conditions
Once you have removed all your conditions you can start to pack and prepare for the move.
Call the utilities companies and update everyone on your soon to be new address.
Congratulations you are about to own your own home!