The Vancouver Real Estate Offer Process
The Offer Process in Real Estate is often the most nerve-wracking and exciting times for Home Buyers. After spending time (perhaps months!) looking for your next home, you’ve finally found one that you want to buy. What’s happens when you want to offer on a home for sale? Here are the things you need to know when it comes to East Vancouver Real Estate.
First, let’s make some assumptions.
1. You’ve already been pre-approved for a mortgage. This means the property is within your budget and you’ve already gathered a significant portion of the documents needed.
2. I’ve already seen the property with you. I’ll know how you feel about the property, we’ll have discussed the property in detail (pros, cons and things to be aware of), and we’ll have talked about value.
Standard Offer to Buy a Vancouver House
In Vancouver we use Standard Contracts of Purchase and Sale. We’ll go through it step by step. The most important aspects of the offer are:
1. Price. I’ll have spoken with the listing agent about the Sellers motivation, so we’ll take that, days on market, amount of interest, recent comparable sales and your feelings into account when determining the offer price.
2. Deposit. Good faith money, typically 5% of offer price, this goes towards the down payment. You’ll need to give me the deposit by bank draft when all subjects are removed.
3. Dates. When do you want to move in? Here, we also have to consider the Sellers preferred dates as well. Often if you’re going in with a low offer we’ll give the Sellers the dates they want to sweeten the deal. Try to be flexible here, but if you need specific dates we’ll work with them.
4. Subjects! These are the conditions that need to be met in order for the Buyer to proceed with the transaction – the are for the sole benefit of the Buyer. They allow the Buyer to perform due diligence. Subjects are generally pretty standard, though different situations require different subjects.
Typical subjects include:
- Financing Approval: ensuring your mortgage is confirmed with rates and terms that the Buyer approves. You can never get definite mortgage approval until a specific property is considered.
- Home Inspection: we’ll bring in a home inspector to do a thorough visual inspection of the home. With years of experience, inspectors are a great resource to tell you the current level of maintenance on the house, what needs to be repaired or replaced, what you can expect in the future and more. Read my post about Home Inspections.
- Property Disclosure: we’ll look at the Sellers Property Disclosure Statement – a document detailing what they know about the property, which includes any current issues, anything that isn’t authorized, etc.
- Approval of Strata Documents: Given that your buying into a Strata Corporation, it is well within your rights to read how the building operates, so we’ll read through the last 2 years of minutes, financials, budget, any maintenance or engineering reports, the depreciation report, insurance documents, by laws, rules, strata plan, Form B, etc. I’ll help you go through these documents to point out things you should be aware of, things we need more information on and what could be upcoming. If you’re interested in buying a condo or townhome, take a look at my blog series for East Van Condos & Strata Properties.
There are many other situations that can garner other subjects, including, but not limited to: approval of the current lease (if buying a property with a tenant or mortgage helper), approval of property insurance, confirmation that there is no oil tank on the property (for East Van houses), confirmation of the zoning and city bylaws when it comes to the lot or home, etc.
5. Terms. These are elements of the contract that both parties need to be aware of, but aren’t conditions of the deal – sometimes aspects of the offer need to be in writing so both parties are clear on expectations. We use standard terms, which include:
- the Seller will leave the home in clean condition with no garbage or debris
- the Buyer is aware that room measurements are approximate
- the Seller confirms that the home was never used as a grow-op (to the best of their knowledge)
- the Buyer will receive two full sets of keys to the unit and all common areas
There are many more terms included in any offer, but this gives you an idea. Again, these terms change depending in the situation, but we’ll ensure that you’re protected.
Negotiating to Buy a Vancouver House
Once the offer is signed, I’ll submit it to the listing agent. Though not as common any more, I can ask to submit the offer directly to the Seller (with the listing agent present) to try to appeal directly to the Seller.
The listing agent will then discuss the offer with their clients, and have three options:
- Deny the offer. If this happens, you were most likely too far off their expected price, or they shave other interest and are expecting a better offer.
- Accept the offer! This is the best situation as the offer was accepted as you presented it.
- Counter the Offer. The Sellers can change anything about the offer – price, dates terms, subjects, etc – if this happens, you have the following recourse:
1. Deny their Counter Offer. The deal terminates at this point. You can resubmit a new offer later on, but for now this Contract has been terminated.
2. Accept their Counter Offer. You’ll have a an Accepted Offer and can start your due diligence.
3. Re-Counter. You can change the price (or dates, or subjects, etc) again, and hope they accept.
The negotiation process can be quick, or it can be long, taking days to come together. What you offer often depends on a few factors, which include:
- Other interest in the property. Has it been listed a week and is expecting to get offers from many different buyers (multiple offers)? If this is the case you have to come in with your strongest and best offer, The thinking in this situation is you may only get one chance to submit an offer, so you have to submit the best offer you’re comfortable with, understanding that it may not be chosen. This is not to say that you should offer well beyond it’s value, but sometimes you’ll have to offer more than the asking price. East Vancouver is seeing a surge in interest, and all the great properties are getting multiple offers in the first week.
- Days on market. Has the property been on the market a few days, or a few months? If it’s only been on a few days, you might not have as much negotiation room, but if the property has been on a few months and hasn’t received any offers, the Seller is usually much more willing to work with an offer, even if it’s lower than hoped.
- Price. When you want to offer on a property, I’ll do a comparable search for other properties currently on the market and similar properties that have recently sold to have an idea of the property’s value. You shouldn’t be over paying for a property just because the Seller listed it with a high asking price.
- Your interest level. If you’re fairly flexible on when you can buy, and wouldn’t be absolutely heartbroken if you didn’t buy a certain property, then we can push the Sellers a little bit more when it comes to negotiation.
We’ll go through all of this and more when it comes to submitting an offer on a home for you. We can get an offer together quite quickly, and have proven success in negotiations. If you use the WeLoveEastVan team in an offer situation, our years of experience, and good relationships with other realtors in the city can often help in negotiation, as the listing agent knows that we’re good realtors who will work to get the deal done, quickly and smoothly, which can help in the Sellers choosing our offer over another Buyers.
Give the WeLoveEastVan team a call if you’re seriously looking into buying property in East Vancouver, we are your best resource to get you into a great house.