Taking the Plunge and Writing an Offer
Okay! We've found you the right property and now you are ready to write an offer.
Our next step will be a meeting to discuss and write the offer. During this meeting we will examine the property, review comparable properties that have sold, and formulate an offer price. We will also talk about when you need to occupy the property by. In the offer we will insert conditions (also referred to as subjects) that must be met before you agree to purchase. With a stratified property these often include, but are not limited to, the following conditions:
1. The Strata Documents Condition
“Subject to the Buyer, on or before (typically 7 days from acceptance) receiving and approving the following documents with respect to information that reasonably may adversely affect the use or value of the strata lot including any bylaw, item of repair or maintenance, special levy, judgment or other liability , whether actual or potential:”
- A current Form ‘B’ (Information Certificate attaching the strata corporations rules, current budget and the developer’s Rental Disclosure, if any);
- Registered Strata Plan (signed by the Seller, to confirm the advertised square footage of the unit and to determine those areas designated as common or limited common property);
- A Title Search of the property to determine ownership and the encumbrances on the property;
- The minutes of the strata council meetings and minutes of the Annual General Meetings (this will give you a good idea as to the operation of the complex and any issues current or potential);
- Any engineering and/or envelope reports issued on the building;
- The Property Disclosure Statement (signed by the Seller, indicating any deficiencies or concerns known to the Seller);
- The Bylaws and Rules of the complex (to acquaint ourselves to noise rules, pet restrictions, rentals, repair and maintenance responsibilities, etc.);
- The Financial Statements (where are Owner maintenance fees being spent and what is being saved for future capital outlays). This condition is for the sole benefit of the Buyer.
As a Buyer you will receive a copy of all of the above documents. Together we will review these documents, discuss their contents and then create a list of questions to ask of the Property Manager or members of Strata Council.
2. The Inspection Condition
"Subject to the Buyer on or before ( typically 7 days from acceptance) at the Buyer’s expense, obtaining and approving an inspection report against any defects which reasonably may adversely affect the property’s use or value." This condition is for the sole benefit of the Buyer.
I highly recommend an inspection for every property purchased. A professional inspection will determine the integrity of both the mechanical and structural aspects of the home you are considering. Inspection costs vary depending on the size, features and age of the home.
The inspection itself offers you the opportunity to walk through the home with the Inspector as he/she reviews each room/component in the home. It is advisable to accompany the Inspector during the inspection or at least review the report prepared by the Inspector upon its completion.
3. The Financing Condition
"Subject to a new first mortgage being made available to the Buyer by ( typically 7 days from offer acceptance), in the amount of $_______________ at an interest rate not to exceed ___________% per annum calculated half yearly , not in advance, with a ______________ year amortization period, ______________ year term and repayable in blended payments of approximately $ __________ per month including principal and interest [ plus 1/12 of the annual taxes , if required by the mortgagee]." This condition is for the sole benefit of the Buyer.
Once the offer is accepted, your financial institution will need to review the offer. They may (depending on the deposit) require an appraisal of the property (see typical costs) They may also wish to review the strata documents if the property is stratified.
Negotiating the Offer
With the offer prepared the next step is its presentation. Upon presentation, the Sellers will do one of either three things; accept the offer as is, reject the offer entirely or counter the offer. If the offer is countered, you will have the opportunity to counter back, accept or reject the counter-offer. If the offer is accepted, then the next step will be to remove the conditions in a timely manner. Frequently, this is within a 7-day period as negotiated in the Contract of Purchase and Sale.