Considering Offers

While your real estate professional’s role is to guide you through the offer process, familiarizing yourself with various aspects of offers will help. For example:

Terms: A term is a detail in the purchase contract that the buyer and seller agree to. Common terms include:

  • Possession date: the date on which the buyer will take possession of the property.

  • Inclusions and exclusions: Inclusions are those items the buyer wants included in their purchase, typically appliances, security systems, etc., and exclusions are those items excluded from the purchase, for example if the sellers are taking the attached curtain rods or TV wall mount with them. Carefully review the inclusions/exclusions in the buyer’s Offer to Purchase as they may not be the same as what you had in the listing.

  • Time for acceptance/expiry of offer: If the buyer put an expiry date/time on their Offer to Purchase, make sure you provide a response or a counter-offer before that day/time. If you don’t, the offer expires, and there is no guarantee the buyer will extend the expiry or submit a new Offer to Purchase.

  • Pre-possession inspection: A pre-possession inspection term gives the buyer the opportunity to view the property, with their real estate professional, prior to possession. Such an inspection can help the buyer confirm the property is in substantially the same condition as it was when they viewed it and made their offer.

Conditions: Buyers often place conditions in their Offers to Purchase in order to protect their interests. When the buyer writes a conditional Offer to Purchase, it means they want to buy the property but before making it a firm sale, they want the ability and time to review or confirm information. Financing conditions and home inspection conditions are common for many buyers.

All conditions need to have an expiry date. The buyer will want to include expiry dates that provide them with enough time to satisfy those conditions – or, enough time to determine that they will not be waiving the conditions. When you accept a conditional offer, the deal doesn’t become final until the buyer satisfies and waives their conditions. If the buyers don’t waive their conditions in writing by their expiry date, the contract ends, and you and the buyer have no further obligations to each other.

Deposits: A buyer should provide a deposit with their offer. The deposit amount sometimes demonstrates how serious the buyer is about the purchase. The Offer to Purchase will also include details on who will hold the deposit in trust. It could be the seller or buyer’s brokerage, or a third party, such as a lawyer.

Communication for acceptance: The buyer’s Offer to Purchase needs to be clear about the way in which communication must occur between the buyer and/or their real estate professional, and you and/or your real estate professional. The standard purchase contract in use in Alberta allows for in-person delivery, or communication by fax or email.

Holdbacks: A holdback is when a buyer holds back some of the purchase price until the seller completes certain items or tasks. Common reasons for a buyer to propose a holdback include:

  • the seller is in the process of renovating a room in the property, but the renovations are not complete when the buyer makes an offer. The buyer includes a holdback in their Offer to Purchase to ensure the seller completes the work by a certain day

  • the seller indicates plans to have the roof replaced before possession day. The buyer includes a holdback in their Offer to Purchase to ensure the seller replaces the roof, at their expense, before possession

  • the seller provides an RPR that shows an encroachment and there is no encroachment agreement in place. The buyer may include a holdback until there is a signed encroachment agreement registered on title.

A holdback is a formal agreement between a buyer and a seller; buyers can’t simply decide to hold back funds at closing because they see something they don’t like. If a buyer wants the option of a hold back, they need to include it in the purchase contract and the seller needs to agree to it.

Negotiations

Hiring a realtor with strong negotiation skills is important in every real estate transaction. A lot of people think that negotiation is about a winner and a loser, but the truth is that a good negotiator finds a way to negotiate their best interest while collaborating so that each party achieves their goal and ultimately a win-win situation. Sometimes the best way to get what you want is to give up something that you don’t necessarily want as badly. My negotiation training has earned me the “Master Certified Negotiation Expert” designation MCNE, which is the highest level of negotiation training in the Calgary Real Estate Industry. My MCNE designation often surprises my clients with the unique negotiation strategies I can offer and has proven time and time again to benefit my clients in their negotiations. Negotiating is a learned skill that must be honed and developed over time and practice. I take it very seriously as I know how important a negotiation strategy can be to a transaction.

There will likely be some negotiation between you and the buyer after they submit an Offer to Purchase. You can outright accept or reject their offer, make a counter offer, or ignore their offer completely.

The list price is the price at which you listed your property, but there’s a good chance it’s not what a potential buyer will offer, at least not as a first offer. It’s up to you whether you accept a buyer’s offer. The buyer probably thinks your listing price is too high and you probably think their offer price is too low, so now what?

Negotiate! You can accept or reject the buyer’s offer, make a counter offer, or ignore the offer completely.

  • if you accept the offer and it’s unconditional, congratulations! You’ve sold your home.

  • if you accept the offer and it contained conditions, the buyer’s real estate professional will work with their clients to satisfy and waive conditions by the condition(‘s) expiry date

  • if you reject the offer, it’s up to the buyers to decide what they want to do next – they can submit a new Offer to Purchase or look elsewhere.

  • if you want to make a counter offer, discuss with your real estate professional the terms with which you were unhappy (price, possession date, inclusions, etc.). Provide a counter offer with the terms you want.

  • if you choose to ignore the offer, it’s essentially the same as rejecting it. The buyers may submit a new Offer to Purchase or they may go elsewhere. If the buyer didn’t include an expiry date in their Offer to Purchase, the offer remains open for you to consider later unless they formally withdraw it.

In each of these situations, your real estate professional will discuss your options with you, and highlight the pros and cons of each. Ultimately, it’s your decision how to proceed.

Multiple Offers

It’s also your decision how to proceed in the event of multiple offers. A multiple offer situation is when multiple buyers submit an Offer to Purchase on the same property, at the same time. As the seller, you determine the process to follow, including whether you want to disclose the multiple offer situation to potential buyers, and whether you want to disclose the terms and conditions of offers you receive to the other potential buyers.

Your real estate professional should:

  • immediately tell you of the multiple offer situation

  • explain the choices you have and strategies available for offer presentation

  • recommend you look at each offer before making a decision

  • advise you of the buyers’ options and indicate that buyers may, and often do, remove their offer in a multiple offer situation

  • inform you it is your choice whether to disclose the multiple offer situation to the buyers

  • NOT disclose a multiple offer situation without your consent

  • follow your lawful instructions

  • try to present all offers in the same time frame

  • continue to present all offers to you up to the expiry of a previous offer or to the end of the seller representation agreement

If you disclose the multiple offer situation to buyers, they will have to decide whether to:

  • increase their offer prior to presentation

  • leave their offer as it is

  • withdraw their offer

  • reconsider the terms, conditions, inclusions/exclusions of their offer

Potential buyers may include a term in their offer that prevents you, as the seller, from disclosing the details of their offer. If they include such a term, you must abide by it. They are also required to indicate if their offer is conditional on the sale of their current property, which may affect your decision.

Source: Real Estate Council of Alberta