Agreements of Purchase and Sale are official documents which should not be taken lightly.
They give to home buyers and sellers legally enforceable rights and responsibilities.
Learn about them, and see what you can do
before you enter into your contract.
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| Offer to Purchase |
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If you want to buy a house you have to submit to the seller your written Offer to Purchase.
Your agent should discuss with you all details and prepare the offer in writing. Then, it will be passed to the seller on your behalf.
The seller may accept or reject it, or respond with an own counter-offer.
You can also choose one of these options when your offer comes back to you changed by the seller. Changes can be made as long as both parties agree to them.
Once your offer is accepted by the seller you will have to deposit $500 - $1000, held in your agent's brokerage trust account.
 Conditional Offers
A conditional offer depends on whether some conditions (also called subject clauses or condition precedents) will be met.
When any of your conditions is not satisfied you can back out of the agreement without consequences.
Conditions reduce your risk of making a bad purchase. On the other hand, unreasonable and excessive conditions may discourage the seller to accept your offer.
Firm Offers
A firm offer means that the buyer is prepared to purchase the home without any conditions. Firm offers are preferred by sellers since they enable fast sales.
Schedules
Agents usually use pre-defined agreement forms. When there isn't enough space to enter all conditions into the agreement schedules are applied (also known as addenda or appendices). They are extra pages added to the contract to let the buyer and the seller write as many conditions as necessary.
Amendments
When specific condition has been fulfilled both sides will sign an amendment - a legal note added to the agreement to remove that condition.
Amendments can also be used to change transaction terms, which can be renegotiated at any time, provided the mutual agreement principle is followed.
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| Agreement of Purchase |
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Once you and your seller reach a full agreement on all terms and conditions, and all the conditions are removed your offer becomes the legally binding Agreement of Purchase and Sale.
At this point you will have to increase your deposit to 5% of the purchase price.
The deposit will be later transferred to your lawyer's trust account for transaction closing as a part of your down payment. If you put more than 5% down you will have to pay the rest of your down payment to your lawyer not later than on the closing day.
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| Negotiations |
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| Let your agent do the job of negotiations for you - it's one of the main reasons agents are hired for.
Make sure your agent knows everything about your home buying needs, so he or she can be an efficient representative and advisor.
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| Have your mortgage pre-approved as soon as possible. Secured financing will send a clear signal to the seller that you are able to pay, and can get you ahead of other competing offers.
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| Make sure your offer is reasonable and in line with average price in the area, so it doesn't alienate the seller. Be ready to walk away if you can't negotiate anything within your limits.
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| Think about what is important to the seller. If you carefully evaluate your seller's circumstances you might be able to negotiate a better deal.
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| Distinguish between your needs and desires. Your home needs should be non-negotiable. Rate your desires in terms of importance - such a list will help you decide what you can compromise on.
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| Even if you really don't like the house painting or decoration, refrain from negative comments when you see the house. You may hurt the seller's feelings and jeopardize your negotiations. |
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What if I breach my
Financing