After months of looking for that perfect home you think that you have located it among the various types of Comox homes currently for sale at market prices/a>. Now what? The next step is to prepare an offer. But what kinds of things should be considered in an offer? The answer is not always straight forward.
Price is typically first and foremost in most people’s minds. The offering price is a very important element of the offer and it will often be (or should be) influenced by the type of real estate market that exists at the time. Is it a buyers’ market or sellers’ market? Is the market neutral? Will you be competing in a multiple offer situation? All of these inputs and several others play a role in the offering price.
The deposit is another consideration. Many markets have a normal benchmark that is applied to deposits. Do you know what is typical for your market? Do you know whether or not deposits are legally required in a real estate contract?
Most contracts also have terms and conditions. Think of a term as a promise that forms part of the contract. For example the agreed purchase price is a term that the buyer promises to pay and that the seller promises to accept. Terms can be either essential or subsidiary. Conditions are often referred to as subject clauses but the word condition may also refer to an essential term in a contract. Subject clauses are easily spotted by words such as “Subject to the Buyer on or before ….” This type of condition is a condition precedent because it describes a condition that must occur before a party is liable to perform his or her principle obligations under the contract. While some people do write subject free offers the practice is not common in smaller markets such as the Comox Valley.
Fairly common condition precedents include those related to a title search, approval of a Property Disclosure Statement, and Financing. There are, of course, many more that could be applicable to the specific home or property of interest. Condition precedents will have dates established as the specific time within which the condition must be removed from the contract of purchase and sale. Sometimes, however, it is not sufficient to merely provide a date by which the condition precedent must be satisfied. For example, a time clause is often added to a condition precedent that makes the purchaser’s obligations subject to the purchaser being able to sell property owned by the purchaser. There are many other types of conditions precedent (commonly referred to as “Subjects”) that can apply to certain types of properties.
Dates in an offer can also be very important. The completion, possession and adjustments dates need to be specified and agreed by both parties to the contract. Other things such as included and excluded items also need to be agreed.
Offers prepared by real estate agents in the province of BC will contain a number of standard terms and conditions that have passed the scrutiny of legal review. In addition to those standard ones, agents need to examine each offer on a case-by-case basis and add the additional ones that are applicable to the specific home and property. Offers will also have a time and date specified until which the offer is open for acceptance.
This short discussion of contracts just scratches the surface of the topic. The requirements of real estate contracts can and do change. A recent change to the ones copyrighted by the BC Real Estate Association and Canadian Bar Association (BC Branch) included a restriction on assignment of contract. Knowing what should be in a contract is important to the buyer and to the seller. A competent real estate agent can help you ensure that the offer you make contains what is needed.