Blueprint of a Winning Offer

When submitting a formal offer on a home, there will be far more details than just your purchase price.

In a competitive real estate landscape like Toronto, crafting a well-rounded and enticing buying offer is crucial in securing your dream home.

Below, we will cover some of the fundamental aspects of a buying offer. Each of these components plays a vital role in shaping the terms of the deal and influencing the likelihood of acceptance.

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Purchase Price

The purchase price represents the total amount you’re willing to pay for the home. When placing an offer, selecting the right purchase price requires a fair amount of strategy. You will want to find a balance between making a competitive offer and ensuring that you’re not overextending your finances.

When we start negotiating for you with a Seller there are many factors to consider before you place the initial offer and start the negotiations.

First, we start by having a phone call with the listing agent to see what the Seller’s motivation is to sell and to see if they’ve had any offers. We also want to know if the Sellers have an expectation for the price that they’re willing to sell for and any other information we can find out.

We take this information and factor in how long the property has been on the market and what the recent sales in the area have been to help give our clients advice on how to structure the offer.

How Listing Price is Set

1. The Seller lists at a price close to what they feel the market value is with the expectation the potential purchasers will be negotiating this price.
2. The Seller list at a price that is lower than what they feel the market value is to increase the interest and to encourage multiple purchasers to place offers at the same time. In this scenario, there is typically an offer date set when the listing comes on the market.

This pricing strategy can be very confusing for potential Buyers because they’re not sure if the Seller has priced $10,000 under what they’d like to sell for or $100,000 under what they’d like to sell for. This is where our experience in the market and appraisal training helps, before we view the property we can estimate the selling price to estimate if the property will sell in our client’s price range.

Deposit

As a buyer, the deposit demonstrates your commitment to making the purchase. Once the deposit is made payable, it is held in trust until the completion of the transaction. The deposit is credited to the buyer on the closing and is used towards your closing cost, lawyers fees and your downpayment.

What is the Typical Deposit Amount?

In Toronto, Vaughan, Mississauga, most parts of Durham Region and surrounding areas, a deposit amount of 5% is generally considered to be appropriate. 

When is the Deposit Due?

The deposit is usually made payable within one day of the offer being accepted. In most cases, the offer is paid either through a bank draft or direct deposit. In instances where multiple buyers are competing for one property, it is ideal to have the bank draft available in advance so that it can be presented with the offer. 

Down Payment 

This is the initial lump sum you pay towards the purchase price, with the remainder financed through a mortgage. Not to be confused with the deposit, the down payment is usually a more substantial sum that goes directly toward reducing the loan amount. This amount is paid on the closing through your lawyer and would be determined with your bank or mortgage broker before you place any offers.

What is the Typical Down Payment Amount?

As a buyer, your down payment will depend on your individual buying power, i.e. what’s in your savings and what you can reasonably afford to put down on a property.

While 20% was once the status quo, today, Toronto buyers can make a down payment starting at only 5% of the purchase price. However, if your total down payment is less than 20%, you will be required to obtain mortgage insurance, the most popular provider in Canada is CMHC. For self-employed buyers, cottages, and investment properties banks may require a 30% downpayment or higher.

We always recommend getting pre-approval from your bank or a mortgage broker before you place an offer.

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Looking to buy Toronto real estate? Explore these additional resources from our website for helpful guidance. 

• Can You Trust Virtual Showings?
• 3 Perks of Buying a Home With a Built-In Basement Suite
• Buying in Toronto? Here’s Why You Should Take All the Help You Can Get

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Conditions

Conditions are specific terms that must be met in order for the purchase to proceed. While they are designed to protect buyers’ interests and investments, it may be necessary to limit or forgo certain conditions when the market is competitive. 

What are the Most Common Conditions in Toronto? 

Financing:

When an offer is conditional on financing, the purchase can’t be finalized until the buyer has secured a mortgage for the property. The timeline for a condition on financing for residential property is two to five business days.

Home Inspection:

When an offer is conditional upon a home inspection, the buyer has the right to have the property properly analyzed by a professional home inspector. The timeline for a condition on home inspection for residential property is two to five business days. A good home inspector will give maintenance tips during the home inspection to help prepare you for homeownership.

Condo Status Certificate Review:

In a condo purchase, we always recommend that the unit’s status certificate is reviewed by a real estate lawyer. In some cases, the Seller will have pre-ordered the status certificate and we can have a real estate lawyer review it before you place an offer.

If the Seller does not have a current status certificate we recommend placing an offer with a condition that would require the Seller to order a new status certificate at their cost and to provide it to us so that we can have a lawyer review it.

It can take up to ten days for a condo corporation to provide a status certificate and one to three days for a lawyer to review it. We have a list of lawyers that are very experienced and can review status certificates at no cost.

Closing Date

The closing date specifies when the buyer may take possession of the property and move into the home. As a buyer, It’s important to ensure the closing date aligns with your needs to avoid any inconveniences during the transition.

How Far Out Is the Typical Closing Date?

In most cases, the closing date is between 45 and 90 days from when the offer is made. However, if the property is vacant, the seller may push for a faster occupancy between 30 and 45 days. 

Closing dates cannot be on weekends or holidays and we do not recommend having the closing date on Fridays, the last day of the month or the day before a holiday.

Irrevocoibility

The irrevocability determines when the offer expires and establishes a timeframe within which the buyer or seller must accept, reject, or counter your offer. In a fast-paced market like Toronto, deadlines can be quite short. 

What is the Typical Offer Acceptance Deadline?

When representing a buying client, we typically recommend a tight timeline. Generally, we make offers valid for the day they were placed.

How to Make Your Offer Win

Crafting a competitive and enticing offer starts with the assistance of a high-performance real estate agent – like Ramsay Real Estate Group. 

With over a decade of experience in Toronto’s fast-moving market, our extensive knowledge and powerful negotiating tactics can help you land a home you’re happy with. It’s our priority to seamlessly match you with the right property in the shortest amount of time – all while getting you the best value for your dollar. 

Ready to find your dream home? Ramsay Group is your ticket to a successful home purchase. Click here to contact us by email or call 416.906.8366 to begin your bespoke buying journey.