Evaluation and Negotiation of the Offer

When You Receive An Offer
The fact that I will be acting as the intermediary between you and the buyer will go far in helping you assess the offer in a calm, rational manner. Here is a basic overview of how this process usually works:

• I will show you every offer submitted on your property. I will call for an appointment to discuss the offer with you.
• We will prepare an "Agreement of Purchase and Sale", detailing the specifics of your property and the buyer's terms.
• If the offer was drawn up by another REALTOR^® with the buyer, that REALTOR^® will more than likely present it in a meeting with you and I.
• Price is only one component - although an important one – and should be considered within the broader context of all your sales objectives.
• Once you have reviewed the offer thoroughly, you may choose to have you and I discuss it privately.
• With any offer, you have three choices: accept it, reject it, or "sign it back" to the buyer with a counter-offer. After you have made your decision, the REALTOR^® working with the buyer will take your response to the buyer.
1. If you accept and sign the buyer's offer, you have formed a legally binding contract to sell your home, subject to any conditions.
2. If you reject the offer, the buyer may choose to submit another offer for your review and response.
3. If you "sign back" proposed changes to the buyer's price or terms through a counter-offer, the buyer then has the option of accepting your terms, rejecting them or submitting yet another counter-offer. This process of exchanging counter-offers continues until both parties agree completely, or until one of you ends the negotiation.

Purchase Price
The price the buyer is offering for your property.

Deposit
When the buyer submits an offer, normally they include a deposit to demonstrate that they are serious about their intent to buy. This deposit will usually be in the form of a cheque, payable to the listing broker, who will place the deposit in trust until the deal is completed or terminated.

Clauses Particular to this Agreement
Every transaction s unique, so space has been provided on the standard form for any provisions that apply specifically to this offer. Often these provisions are stated in the form of "conditions" to the Agreement. Conditions are generally inserted at the buyer's request and for their protection. If a condition is not satisfied within the time allowed, the offer is no longer valid and the buyer usually has the right to get the deposit back.

Many conditions contain language like "subject to" or "conditional upon". For example, the buyer may want to insert a condition that says the offer is subject to the buyer arranging a specific amount and type of financing, or that the offer is conditional upon the buyer selling their current home or upon the inspection of the house by a professional inspector. Conditions must always be ast5isfied by a specific date or within a specific period.

An unconditional offer that is signed by the buyer and accepted by the seller immediately becomes a binding contract to both parties. However, if the seller accepts an offer containing one or more conditions, the contract is subject to those conditions. Once the conditions are satisfied or "waived" (relinquished), the deal becomes firm.

Chattels Included and Fixtures Excepted
In order to attract buyers, it is common for sellers to include in the selling price some chattels that aren't normally considered part of the swelling itself. These movable pieces of personal property often include washers and dryers, or microwave ovens, and are listed as items to be included with the sale.

Fixtures are permanent improvements to a property that normally stay with the property as part of the sale. However, it isn't always clear what constitutes a fixture or whether it will stay. For example, the seller will naturally want to retain a dining room chandelier that is a family heirloom. Since the chandelier could be defined as a fixture, it will be listed as an exception in the offer. From a legal standpoint, if it is a fixture and not mentioned in the agreement, it is considered part of the purchase price.

Irrevocability of the Offer
This is the period during which the offer is open for your consideration. If you do not respond to the offer before the time and date specified, the offer automatically becomes "null and void". If is often just a few hours to encourage your early response.

Completion Date
This date, also referred to as the "closing date", is the day when the parties agree to complete the transaction. Closing dates are often schedule for 30 to 60 days from the date of the agreement, although this period will vary with circumstances.

Time to Examine Title
"Title" is the legal evidence of ownership, and the buyer will want to be sure a lawyer has time to confirm that your ownership is free of restrictions.

The Most Common Points of Negotiation
While an offer can contain a variety of negotiable terms, there are several that occur repeatedly in residential real estate transactions:

Purchase Price
If you are like most people who list their home for sale, you probably have a "price range" in mind. At times, buyers may offer less than your asking price. How you respond in this situation can mean the difference between a successful sale and a lost opportunity. If you counter with too high a price, you may scare the buyer away and kill the sale. However, if you receive an unreasonably low offer, you owe it to yourself to counter with a price you can accept.

You may be able to obtain a higher price by "throwing in" an additional chattel; perhaps your buyer would enjoy having your portable dishwasher, or washer and dryer, and is willing to pay a higher price if you will include these items in the sale. Remember, your main objective is to sell your home.

Usually the first person to make an offer on your home often represents your best prospect because buyers who make an offer on a property soon after it comes on the market will generally offer a better price since they don't want to lose out to other buyers interested during the initial flurry of activity.

Furthermore, if you can negotiate terms agreeable to both parties and close the sale in a reasonable period, you will save the carrying costs (mortgage payments, property taxes, utility costs, maintenance, etc.) of keeping your home on the market for several additional weeks or more while awaiting another offer. Keep this thought in mind if the difference between your price and the buyer's price is relatively small – you may realize a larger profit by accepting a somewhat lower price now and avoiding extra carrying costs later.

Possession Date
Next to price, the day you relinquish possession of your property is the most frequently negotiated item in an offer. If you are fortunate, the buyer will agree to your proposed possession date.

However, buyers frequently have their own date in mind, particularly if they have already sold their home, or their lease is up, and they have to move by a specific date. As your representative, I can help you balance the buyer's needs with yours and work towards obtaining the things that are most important to you.

Many offers contain "conditions" that must be met before the sale can go through. The buyer will insert any conditions on the Agreement of Purchase and Sale in the section entitled, "Clauses particular to this agreement".

It is up to you whether to accept a conditional offer. You may choose to reject an offer because an unacceptable condition. Or, you may respond with a counter-offer that alters the condition more to your liking. Here are the most prevalent conditional clauses you are likely to come across:

• Purchaser to obtain financing.  Sometimes buyers, who already have a pre-approved mortgage, will insert language that makes their offer conditional upon obtaining a specific amount and type of financing by a certain date. If they don't succeed, the offer becomes null and void
• Sale of the purchaser's home. Sometimes buyers start looking for another home while their current home is still for sale. An offer received from such a buyer will probably be subject to their home being sold by a specific date. If their home does not sell, their offer to purchase your home is null and void. To protect your interests, this condition almost always includes an "escape clause" that allows you to continue seeking other buyers for your home. If you do receive another offer, the escape clause gives the original buyer the option of removing the condition within a specific number of days (usually two or three days) and firming up the agreement with you.
• Property Inspection. More and more buyers today are making their offers conditional on a professional inspection of the property. If you don't agree to this condition, it may make the buyer suspicious and could scare them away. If the home inspector finds a serious problem, you may have to correct it or lower your price as compensation. If you know about major hidden faults of your home, we recommend you disclose them at the time you sign the Listing Agreement. This is to avoid embarrassment during an inspection and perhaps legal action if the fault isn't discovered until after the buyer takes possession.
• Counter-offers and negotiation. When you negotiate an offer, you may have to compromise on minor items. A successful negotiation is one in which both you and the buyer are reasonably satisfied with the outcome. If one party feels like they are being taken advantage of, the negotiations can break down. Even if you receive an offer with a very low price, or other terms that are inconsistent with your sales objectives, it is probably still advantageous to reply with a counter-offer rather than reject the offer completely. This indicates your desire to negotiate seriously and keep the process going. Many buyers will respond favourably to this attitude, and may more readily accept your terms or submit their own counter-offer that brings the two parties closer together. Your counter-offer will contain an "irrevocable date",which gives the buyer a specific amount of time to respond. During that period, you cannot accept another offer until the fate of your counter-offer is determined. As you negotiate, remember your ultimate goal: to meet your sales objectives. If you encounter a potentially difficult issue, I will be there to assist you every step of the way, but remember to ask yourself; "How important is this to me? Am I really willing to lose the sale over this?"