The process of presenting an Offer to Purchase

The process of making an offer, receiving a counteroffer and then revising it again is not uncommon. However, it can seem like a bit of a roller coaster ride — exciting but tense too. Still, it’s all part of making the deal work best for the individuals and circumstances involved.

Your offer must be made with a deposit to the vendor or the vendor’s agent. This deposit will go toward the purchase price on the closing date. Deposits are usually no more than 10% of the purchase price. But a larger deposit may tell the vendor that you’re very serious about your offer.

A deposit on an unaccepted offer will be returned. If you cancel an accepted offer, you may lose your deposit.

Tips on making an offer

• You may want to submit a conditional offer, a standard contract with your own conditions. However, a clean offer with no conditions attached is often more attractive to the vendor because it is most straightforward.
• Often the vendor will make changes and return your offer. This is called a counteroffer. You may accept, reject or even revise a counteroffer. Offers and counteroffers often make changes to closing dates or chattel — but most often they hinge on money.
• It’s best to know what your absolute upper limit is before you start negotiating or you may get caught up in the action and offer more than you really can afford.

Buying a condominium

Resale condominiums You may wish to hire an independent inspector to check the condominium’s structure and its major systems or ask to see the building’s own recent inspection audit and make your offer conditional on a satisfactory report.

Ensure that the condominium is well maintained and managed and that security systems are effective. Tour the common areas and grounds and speak with other residents.

Consider the age of the building, what improvements and repairs have been done and when. Make sure to check that there is adequate money in the condominium’s reserve fund. In addition, you may wish to review the condominium’s declaration and bylaws.

Make your offer conditional on receiving an estoppel certificate. (Does not apply in Quebec.) There may be a fee for this document but it will provide information including the development’s finances and insurance, and give you an overview of the condominium corporation’s affairs. (In Quebec, the purchaser is entitled to request a statement of common expenses.)

You’ll want to know if there are restrictions on whether your unit can be renovated or leased.

Building your own home

If you are hiring a contractor or builder to construct your home, there are some special considerations. Custom-built homes are usually contracted at a predetermined fixed cost or on a cost-plus contract, which means you pay the builder the cost price of labour and materials and an agreed-upon overhead charge. That charge is either a fixed fee or a percentage of the cost of the job.

It is important to detail all trades used in construction of the home if you want to claim a rebate on the GST charged.

Always use a written contract with a builder. This contract should outline the payment schedule and other details of the construction process, such as who is responsible for dealing with public authorities, getting building permits and arranging wiring inspections.

Specify materials as precisely as possible. Be specific about finishes, the type of tile or broadloom. Provide brand names and model numbers, if possible.

Know your financial limits before you start negotiating.

A typical payment schedule begins with a deposit of 10% of the agreed-upon total cost of the home when work starts. Payments are then made in scheduled installments, in accordance with the percentage of work completed.

Don’t make the final payment until the entire job is finished, inspected and approved by the building inspector.

In some provinces, construction lien legislation requires that you hold back 10% of the total cost of each payment to the builder until 45 days after the building is completed. This protects you from any liens against the property by subcontractors. Check for details of this legislation in your province. Finally, check for provincial and private programs that offer warranties for new homes.