Congratulations, the seller and his and/or her representation have accepted your offer! However, before the Harris-Johnson Team is able and willing to remove conditions on the contract—there are a few things that should be cleaned up before the deposit is withdrawn and the contract becomes ‘unconditional’. The Harris-Johnson advises, and regularly coordinates the following for our clients:
A property appraisal is an important step in the due process of purchasing a real asset, such as a home or apartment. This is done to ensure that the offer made on your behalf to the seller is comparable to what we call the ‘market price’. Real estate is unique for very rarely, compared to something like a stock, is it bought and sold. Also, there is massive product differentiation that relies on a number of tangible and intangible criteria, including location.
The lender or bank will strongly request on the inclusion of an appraisal to make sure that your offer is in accordance to what the house is actually worth at an objective level. The Harris-Johnson Team is supportive of all lending requests.
A home appraisal protects you from love at first sight, and the bank from getting stuck with a property that’s worth less than they have invested. Appraisers generally use two methods for residential properties; sales-comparison, and the cost approaches. Either of these methods is good, and generally will equate very similarly—as they focus on the main structural issues surrounding any property.
The Harris-Johnson Team always aims to limit the potential gap between real ‘market value’ and the ‘market price’, which you offered the seller. Our team of agents is experienced, but a second opinion is always a good decision when making such a large investment.
Right off the bat, we should let you know that very rarely is the first offer ever accepted on a property. The Harris-Johnson Team agents’ goal is to improve that probability, we are also skilled in the art of negotiation—something gained only from 28+ years of experience.
Upon receiving an offer, a seller is faced with only three options:
3. On, in extreme cases—reject
If the seller chooses to offer a counter offer, we have entered the realm of negotiation. A counter-offer generally means that some, not all, of the conditions that were proposed in your offer have been accepted. This may include the price, closing date, or add/remove conditions. Once you have received a counter-offer, you now have two choices
2. Or Counter
Now we attempt to find a mutually agreeable set of terms somewhere in between the two offers. Here is how the Harris-Johnson Team will aim to help:
• Pick your battles: You have to determine immediately what will be your minimum acceptable terms—and in doing so, help your orient your focus on the terms that matter to you most
• Be grounded: an offer will only be accepted if it’s grounded in reality of the buyers and sellers. There is no such thing as a free lunch, especially in today’s economy.
• Combative = Bad: Collaboration, patience and some apathy will go a long way in any negotiation process. Both parties are attempting to find a common ground, so let it happen!
• Know when to fold your hand: At some point, if you deem it unlikely that either party will be able to find mutually acceptable terms—you will have to accept the possibility of moving on. Being prepared to walk away is often the hardest part of the process, but in the long run—the most financially important. The Harris-Johnson Team always will be willing to come back to the bargaining table at a later date
Finally, the house hunt is over! You have scoured the listings, pounded the pavement, and made numerous calls to your Harris-Johnson Team agent. Now with your neighborhood selected, your pre-qualified mortgage in your pocket, and your dream home in sights—it is time that you make an offer.
The Harris-Johnson Team will be along for every bump in the ride. Making your offer is a delicate, and often stressful point in the real estate transaction. However, armed with knowledge and the experience of the Harris-Johnson Team, this will be as easy and pain-free as humanly possible.
Elements of an Offer to Purchase:
Putting it in writing for the seller: Buying real estate is often a lot more complicated than any other kind of transaction you will make in your life. Your Harris-Johnson Team agent will work in direct consultation with you to prepare your “Offer to Purchase”, an important legal document that proposes commitment to buy the sellers dwelling (or land). In property law, if it is not written down—it doesn’t exist.
Types of home purchase offers: You and your Harris-Johnson Team agent could draft an offer that is firm, or with conditions. A Firm Offer to purchase the home means that you are committed and it signals direct interest to the seller— if it is accepted, the house is yours. A Conditional offer means that you and your Harris-Johnson Team agent have placed conditions on the purchase of the property. Often these conditions are commonly related to home inspections, financing approval, or subject to sale of the current buyer’s existing property.
Factors that are included in the offer:
o This is the most important, and often the most difficult judgment to make. Too small an offer will place you out of the market, and too large an offer will leave money on the table. Our Harris-Johnson Team agents are here to help decipher the local housing market trends that could impact the price that will be included in the offer. By helping you assess these conditions, including the competition experienced from other buyers—our agents will help position your offer for the highest probability of success.
o A deposit shows good faith on behalf of your commitment to the property; generally sellers accept an average of around 5%. However this amount is subject to conditions—and will be applied against the purchase of the house on closing day.
o The terms of the offer generally relate to the implications surrounding financing. As a buyer, you have the option of arranging your own financing through our preferred brokers and lenders (Or, depending on other conditions the Harris-Johnson Team my advise you to assume the seller’s mortgage, especially when they have locked in an attractive interest rate compared the current market).
o See conditions explained in previous section.
• Inclusions & Exclusions
o You may make your offer contingent on the inclusion or exclusion of items in the sale. Often these are appliances or decorative items.
o In another blog post, we will go into more depth regarding the differentiation between “chattel” and “fixtures”—which should help to explain what may or may not be included in an offer for purchase.
• Closing Day
o The closing day is the day the title of property is legally transferred and funds finalized. British Columbia’s possession date is legally 1-4 days after the deal closes.
The Harris-Johnson Team always aims to facilitate a process that is as easy as possible. Our team has constructed a conceptually simple and practical way of comparing multiple properties based on their characteristics. While some clients at first were tentative towards the expected benefit of the process, by the end—almost everyone is able to benefit from the visual representation
When you come to view with us, we will have one similar to this already completed with all the relevant information that you will need to make an informed decision. Leave the work to us, and let us show you a home!
# Of Bedrooms
# Of Baths
# Of Garages
Formal Dining Room
Even after this rational assessment, we have had clients that get wrapped in the emotional feeling of empowerment when purchasing a new home. However, even in the face of these immense emotions—they shouldn’t be able to overrule a reasonable assessment of whether a purchase decision is going to meet your needs, both physically and financially.
The following considerations are some steps that our agents on the Harris-Johnson Team always ensure are solid for our clients before we can really confirm that a commitment to purchase any property is a good idea.
Your lender and/or mortgage broker may say that you can afford, at least conceptually, the home that you are in love with—but are you comfortable with the amount in terms of payment that you will be legally obligated to make? Is your down payment realistic? Do you have enough cash on hand for all closing costs, transaction costs and moving expenses? Does the house invoke the risk of repair costs? Or god forbid, redecorations…
The condition of the home must be a top consideration for any buyer. Buyers should be aware that they are not only purchasing an asset, but a potential stream of future liabilities that may test your ability for financial solvency. In future blog posts, the Harris-Johnson Team will be outlining preemptive steps that we advice our clients to take in order to mitigate these possibilities.
Size and Configuration:
Do you and your house fit well together? Are all the rooms what you wished for? Are you overlooking inconsistencies in order to make things work? Is that windowless closet really going to be functional for your new baby’s room?
As, on average, people want to move into a new home every 5 years, will you be able to resell the house? What are the neighborhood experiences with resell? Would there be any limitations on a transaction that you hoped to complete in a short period of time?
All of these issues are often auxiliary issues that are overlooked by our clients in the heat of the moment. As professionals, our responsibility is that all our clients are making financially sound decisions that will continue to benefit them for years to come. The Harris-Johnson Team ensures that our clients never overlook these issues before they make a purchase commitment
Selecting a neighborhood is often the most exciting part about searching for a new home to live in! The Harris-Johnson Team’s 28+ years of experience is constantly leveraged by our clients during this stage, as we all grew up here—and have been working in the area since! When evaluating a neighborhood, there are a number of factors that one should consider—each of these factors is usually weighed quite differently, depending on the situation of the client.
• The quality of schools in the area (elementary, post-secondary etc)
• Property values
• Potential re-sale values
• Crime rates
• Proximity to future construction
• Proximity to employment, hospitals, shops, public transportation, parks etc
Most often, these tangible characteristics will be weighed against intangible criteria like ‘community vibe’. We recommend getting to know the neighborhoods your are interested in by spending time there; eating, drinking, relaxing. Also, utilize our online resources and other media sources for valuable community information—so that you are able to make an informed decision. During this learning stage, leverage the Harris-Johnson Team’s local expertise!
For first time buyers, financial resources are often limited. Due to this, it is wise to select a home in a neighborhood the meets your primary needs—and is within your price range. The best ways to maximize your home purchase location is by employing a couple of following strategies.
• Look for the “up and coming” neighborhoods that have potential for either rising property values in the coming years, or look like they are developing into the kind of neighborhood you would want to live in. Sometimes, it is valuable to endure short-term pain for long-term gain.
• Always consider the neighborhood demand! This something that The Harris-Johnson Team is very experienced at. As a client, you should be very interested in the competition that surrounds offers made in a specific area.
• By modifying your expectations, you may be able to move into a neighborhood that previously seemed unaffordable. However, this is a tradeoff only you can make!
Check out our Neighborhood Comparison Chart Below:
Quality of Schools