|
Understanding the Offer
Buying or selling a home usually means
you are signing a contract for the most significant financial agreement
of your life. Understanding the offer is the first step in a making a
sound financial decision. First of all, it's important that you
understand that every time you make an offer to purchase, you are
already legally bound to honour all the terms set out in that offer.
It's surprising that many people consider the first offer as just the
opening of negotiations, and that's not necessarily the case. At any
time, if an offer is signed as presented, you're legally bound to all
its terms
Today's home seller should anticipate
that an offer for their property may contain certain conditions that
benefit the buyer. Some conditions may be simple and short-term, such as
requiring a home inspection or approval of financing. Such conditions
are commonplace, and they shouldn't tie up your property for long.
Therefore, these conditions shouldn't have much effect in the
negotiations.
However, if the offer is conditional upon
the sale of the buyer's existing property, that's another story. Even in
today's busy market, you should still be aware that this condition could
possibly be in effect for a relatively long period. And there's also a
very real chance that the condition may never be fulfilled. This
condition benefits the buyer by holding your house at an agreed upon
price and terms, for a specified period of time. Therefore, an offer
that is conditional upon the sale of the buyer's existing home can have
a major impact on the transaction. Before such a conditional offer is
accepted, you should know what you're getting into.
If at any time during the period of this
condition, the buyer either fulfills it by selling their home, or
chooses to remove it, then the offer becomes firm and the transaction
proceeds. If this doesn't happen and the conditional offer expires, then
the buyer is under no further obligation. They may come back to
negotiate a new offer, at terms that may be less favourable to you, or
they may not come back at all. Likewise, the seller is also under no
further obligation.
While a conditional offer is in place on
your property, you are still free to continue marketing your property to
other prospective buyers. This keeps the heat on your buyer to make
every effort to fulfill their condition in the shortest possible time.
You cannot accept another conditional offer while one is in force.
However, if your salesperson has arranged for an "escape
clause" in the agreement, you will still be able to accept a firm
(or unconditional) offer, provided you give your conditional buyer the
option of "firming up" their offer first. If your conditional
buyer does "firm up" their offer, they are simply removing
their conditions regarding the sale of their existing property. The
original selling price and terms of their offer stay in effect,
regardless of what you may have been offered by another party. |
