You’ve found your dream property, congratulations! Now what? The next step in your journey to becoming a homeowner is your agent will put together a presentation of an offer, proposing a deal to the listing agent and their client. Together, you and your agent will decide the terms and conditions of what you wish to offer and determine a fair price for the property. The proposal also most notably includes the Agreement of Purchase and Sale—the official offer to the Seller. It’s a considerable amount of paperwork that needs signing, but once you have those keys in hand and settle into your sweet new digs, it will all be worth it!
This is the period when your offer is valid, as well as the time the Seller is allocated to consider your proposal. After the deadline, if the Seller has not accepted or made a counteroffer, the offer is voided, and you are no longer committed to it.
Once signed, the Buyer’s agent will ‘register’ the offer with the Listing Brokerage to notify that they have a signed offer from a Buyer. Registering offers help make it easier to track offers, especially if there is more than one on a single property.
Single Buyer Offer
Most commonly, a single buyer is offering to purchase the property at one time. Typically, the single Buyer offer process will take place within the span of a single afternoon or evening with the Seller, listing agent and buying agent in attendance of the negotiations. Many offers are also presented with the Buyer close to hand in a nearby coffee shop or restaurant, if not also in person, for the quickest and most efficient negotiation process. However, with the current life and times, more and more offers are being presented electronically. Regardless of who is in attendance, both the listing and buying agent’s goal is to get their clients the best possible price, gauging each other’s flexibility in terms and conditions.
Once assessing the Buyer’s offer, the Seller and their client can do one of three things: accepting the offer as is, rejecting it, or signing the offer back with initials and signatures to changes in price, closing date or any other particular terms. If the Buyer is not willing to negotiate up to those changes, negotiations will cease, and the Buyer will have to go look elsewhere.
Multiple Buyer Offers
Alternatively to single Buyer, multiple Buyers can present their offers simultaneously, creating a bidding war. Multiple offers on a single property predominantly happen when the property is priced at market value or relatively underpriced. Underpricing can be done deliberately or by accident but is rarely recommended as it can be quite risky for the Seller. However, a listing can receive multiple offers by luck or skilled marketing.
In this case, the listing agent will communicate with each Buyer’s agent, gathering the pros and cons of each offer to discuss privately with their client. Once again, one of three things can happen: accept one of the offers outright, reject all offers if they fall below expectations or decide to work with one Buyer if they can change a few things.
With either presentation style, critical discussions should include closing dates, as well as the size and soonest availability of deposit in the form of a bank draft for maximized confidence in the offer. Additionally, it is often also more secure of a decision to accept a firm offer over a conditional, even if the conditional offer is higher. After all, chances could be that the Buyer is caught up in the moment and gets Buyer’s remorse a few days later.
Of course, your best course of action is having a knowledgeable local REALTOR® by your side. No matter if you are looking to buy or sell, contact us today for a trusted guiding hand in the process, drawing on all our combined years of experience.