Tag Archives: real estate agreements
Mark Weisleder – Yourhome.ca
Real estate agreements typically start with an offer being made by an interested buyer and then accepted by a seller. But there is so much more that goes on in between and both buyers and sellers need to understand how to properly prepare for what can be very stressful negotiations.
In most real estate contracts, the buyer leaves the offer open for acceptance by the seller for a period of up to 24 hours. This is called the irrevocable date and time. By signing the offer under seal, once it is delivered, the buyer is not permitted to change his or her mind until the irrevocable date and time noted in the offer. Sellers can accept the offer, reject it or make a counter offer back to the buyer. Eventually, an agreement is reached.
However, many questions arise about the process, especially when there are multiple offers coming in on the same property. For example, let’s say an offer is made to the seller, but the seller notifies the buyer as follows: “I am thinking about your offer, can you improve it?” This is what typically goes on in discussions between real estate agents while the offer is being considered by the seller. What does this mean? Has the seller rejected the offer? Should the buyer say anything? The proper answer should be that this is the buyer’s best offer right now, and the seller can either accept it or make a counter offer. You do not want to end up negotiating against yourself.
What happens if you are asked to fax your offer to the seller and you have been told that there are other offers on the property? You are suspicious as to whether the seller really has any other offers. In this case, insist on your agent receiving a copy of the confirmation that the seller would have given to the other buyer agent who submitted the other offer. You will not see any of the details of the other offer, but at least you will know that it exists. If the seller refuses to provide this, think twice about participating in this process.
Let’s say your buyer agent is presenting the offer in person to the seller and the seller’s agent, and there are multiple buyers waiting outside for their own turn to present. If the seller indicates that they will not deal with any offer until they have seen all the presentations, then my advice is for your buyer agent to take the offer with them and go back to their car. Tell the seller that if they want to negotiate with you further, they can call you back. By taking the offer back, it has not been delivered and the buyer will still have the opportunity to negotiate further if the seller does indeed call you back.
All of these situations demonstrate the need to have an experienced real estate agent to protect your interests in this very stressful negotiation process, which usually happens late at night. You need an objective third party who can make sure that you do not get caught up in the emotion of the situation and either say anything or do anything that you will later regret.
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Mark Weisleder – Toronto Star
Recently, the sellers of a home in The Beach listed their home for sale with a reputable agent. They were aware that buyers were starting to shy away from multiple offers as a result of a collective disappointment in the entire multiple offer process.
One complaint was that there were suspicions that the listing salespeople were providing unfair advantages to their own buyers, from whom they could obtain a higher commission.
Another complaint was around the practice of listing a property, but indicating that no offers would be accepted for five days, in order to permit interested buyers to conduct inspections before submitting offers. Sellers hope that this will create an atmosphere for multiple offers. However, there were examples where buyers would bring in pre-emptive offers before the five day period, and sellers were in some cases accepting them.
The agent in this case suggested a novel marketing approach. The property listing indicated that offers would not be accepted for six days and that the asking price would be $539,000. The house was priced, after a careful review of comparable prices in the neighbourhood, and the sellers hoped that with multiple offers, they might obtain $550,000 to $560,000. The realtor asked them what their “dream price” would be and they indicated $590,000.
Accordingly, the realtor included a note on the listing that simply stated “Buy tonight, $590,000″ and on her “For Sale” sign invited buyers to call for the “buy tonight price.” This appears similar to how products are sold on eBay, where the consumer is given the choice to either bid on the item in the online auction or decide to “buy now” at a set price.
In my opinion, the advertisement of a buy tonight price would probably not be enforceable by a buyer, even if an offer came in at that price. It could be argued that this was still an “invitation to treat” by the seller, thus not binding. The Statute of Frauds in Ontario requires that all real estate agreements be in writing and signed by the parties. In addition, no other terms were mentioned in the advertisement, so if a buyer brought in a full price offer, but with a closing date two years from now, and with a very low deposit, this would clearly not be what the seller had intended. In addition, what would occur if two buyers came with similar offers on the same evening?
Still, a buyer did come in and presented an offer of $590,000, which was accepted by the sellers. The buyers were very happy to avoid the multiple offer process and the sellers were very happy to obtain their price.
The multiple offer process is not easy. You require an experienced real estate salesperson to guide you through the process.
For a seller, it means understanding not only the prices that other properties have sold for, but also what the mood or pulse of the market is at that exact point in time, so that a strategic marketing plan can be put into place to obtain the maximum price.
For a buyer, it mean understanding what the fair market value of the home is and not getting caught up in the emotion of the bidding process, to ensure that you only spend what you can afford.
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