First of all, there are two scenarios... the most common is a single buyer offering to purchase your house or condo. The other is if multiple buyers present offers at the same time, creating a bidding war. Each one of these has some basic similarities and some major differences.
Let’s look first at the traditional single buyer situation. The typical offer process takes about two hours of back and forth in the space of a single afternoon or evening. It is the listing agent’s responsibility to represent the seller’s best interests throughout the process... negotiating hard to get the seller the best possible price.
The listing agent should try and glean from the buyer’s agent how much flexibility in price and other terms the purchaser has and then use that knowledge against them in the negotiations. There’s that old expression... if you don’t ask, you don’t get!
Many offers are presented personally with the seller, listing agent and buyer’s agent being in attendance although more and more offers now are being done electronically.
If we are doing that offer face-to-face, I always try to ensure that the buyer’s agent has their client(s) close at hand... in a coffee shop or nearby restaurant... so we can do our back and forth negotiations quickly and efficiently.
We start off by looking at the buyer’s offer, asking some questions of the buyer agent and then asking them to leave us in private while we discuss the pros and cons. We can do one of three things... accept the offer as it is without change, tell them to “skedaddle” because they’re way off, or most commonly, sign the offer back with changes to price, closing date or other particular terms in the offer.
We initial any changes we’ve made to usually at least two copies, sign them all and then give our signback to the buyer’s agent. By the end of the two hours, we’ve often come to a satisfactory conclusion. If the buyer isn’t willing to negotiate up to what we feel is a fair price within that time, we just suggest they go and try to buy another property!
If we’re doing the offer presentation electronically, we’ll follow this same scenario except initials and signatures on any sign backs are down via the offer software.
There often are one to three conditions in the offer. There could be conditions on arranging satisfactory financing or having a home inspection which are usually for two to five banking days.
If your property is a condominium, there often is an additional condition upon a satisfactory examination of the Status Certificate. The condition usually gives the seller ten banking days to get the Status Certificate from the condo Corporation and then a further 1-2 business days from receipt to examine it.
I would suggest that you order this as soon as you’ve listed your condo. The cost is a basic $100 fee. That way we have it on hand as soon as an offer comes in. In a multiple offer situation, potential buyers can review it ahead of time. In the typical situation, we can supply it right away and the buyer then has to make a yes-no decision within two business days.
If you don’t order the Status Certificate ahead of time, your suite is then essentially off the market for over two weeks while we wait for your Corporation to provide it and for the buyer or his lawyer to review it. If the buyer is not happy with the Status when it does finally arrive, then we’ve just wasted a lot of potential showing time and we have to start the marketing momentum all over again.
When and why do multiple offers commonly happen?
Frankly this happens predominantly when the property is either priced right at market value or highly underpriced either deliberately or by accident! It can be risky for the seller to list the home deliberately under market value, so we rarely recommend that.
On occasion however, by luck or skilled marketing on our part (I like that one), we do get multiple offers on our listings. The offer presentation scenario is slightly different here. We’ll look at each offer independently... I’ll call in the buyer’s agents one by one, we’ll make notes about the pros and cons of each offer and, once we’ve reviewed all of them, we’ll take some time together privately to decide what we want to do.
Again you have multiple choices here. You could decide to accept one offer outright... it clearly is the best one and you’re happy with the price and terms. We might send them all back if they fall below your expectations. And sometimes we’ll decide to work with one particular offer if that buyer is able to change one or more things... perhaps price, perhaps closing date, etc.
The ‘doing it electronically’ option of course is there if the situation warrants it.
In either of these offer presentation styles, there should be a discussion about the closing dates that the buyers want and see if they fit with what the seller wants.
Another important consideration is the size of the deposits given with the offer(s) and whether that deposit is available immediately in the form of a bank draft (another reason to have a face-to-face presentation) which gives us more confidence in that purchaser’s offer.
It often is a more secure decision to accept a firm offer instead of a conditional offer in this situation, even if the conditional offer is a few thousand dollars higher than the firm one. Why?
Because, quite possibly these buyers have been caught up in the moment (known as the ‘auction effect’) and have sometimes paid some or significantly more than the list price. By accepting the conditional offer, you risk it all falling apart if that buyer gets cold feet (buyer’s remorse) a few days later.
Keep Up To Date With Toronto's Real Estate Market
Every month we communicate with our readers to give them accurate insights and statistics about what's happening in the Toronto and GTA real estate markets.
Subscribe to our free monthly FYI Newsletter HERE.
If you are going to sell your suite in the next 1 to 9 months, what you do right now can make a difference of thousands of dollars in your sale price, and there are some simple things you can do forthwith to make sure you get "Top-Dollar" when you do sell.
HERE ARE 3 FREE SERVICES YOU MAY WANT TO TAKE ADVANTAGE OF RIGHT NOW
First, is our FREE "Pin-Point Price" Analysis, where I can take a closer in-person look at your condo and prepare a very specific price for your suite. This price will be much more precise than the general range that you can get automatically from the site - and we guarantee in writing to sell your condo at the "Pin-Point Price" or higher in less than 32-days.
Second, is our FREE "Room-By-Room Review", where I do a 20-minute walk-thru and make specific recommendations about which fix-ups or improvements you should (and should not) do to prepare your suite for sale. I will point out the lowest cost, highest return improvements you can make to help sell your condominium quickly and for more money.
Third, if you would like, I will include your condo in our "Silent Market" of condominiums that are not yet on the market. Because we generate so much buyer interest from our website, Facebook and Google advertising and other proactive marketing, we may be able to find a buyer for your condo without even putting it on the market… saving you both time and money.
These 3 services are FREE. The Room-By-Room Review takes about an 20 minutes, and we can arrange a time during the day or evening, whenever is most convenient for you.