After submitting an offer, you should be prepared to negotiate, not just on the initial price, but on all key factors impacting the sale of the home including deposit, inclusions, dates for completion and possession, and deadlines for subject removals. Ensure you know your budget and requirements prior to submitting your offer so you don’t commit to additional costs in the heat of the process.
In high-demand, low-inventory areas, you may find yourself bidding against other buyers. Some sellers in high-demand niche markets may also intentionally list their home at a low price hoping to stimulate multiple offers. This doesn’t necessarily mean that the price will be bid up significantly over the asking price, but it does mean that due diligence is required on your part and the part of your REALTOR® to ensure the offer you submit is strategic, competitive and reflective of what you are ultimately willing to pay for the property.
Whether you are anticipating competition or not, you should be pre approved for your mortgage prior to your home search and well in advance of writing an offer. In a multiple offer situation, this will impact your ability to negotiate successfully, particularly if others making an offer are already pre approved. It also lets you know the maximum you can afford in what may be a stressful situation.
You can expect one of three responses to your offer:
- Accepted: the deal is complete and once signed by the seller, the offer becomes a binding legal contract.
- Counter offer: the seller may make changes to your offer, such as adjustments to the price, closing date or conditions. You may accept the counter offer and close the deal by signing the document. Or, you may make another counter offer back to the seller.
- Rejection of the offer: the seller may choose to reject the offer and the sale will not go through.
Once both parties come to an agreement, negotiations conclude and you move on to the next steps in the buying process. You will have a set period of time in which to satisfy the legal conditions (“subjects”) agreed to in your contract, such as completing a satisfactory home inspection report or securing financing. Only after your subjects/conditions are removed do you have a legally binding document.