Real Estate Terms for Thunder Bay Buyers
Let’s start with 3 terms that often cause confusion for first time home buyers:
Offer Date, Condition Date, and Possession Date.
Offer Presentation Date
The Offer Presentation Date is the date that the Seller will be reviewing any submitted offers with their Realtor. Offer presentation is not only date driven, but also occurs at or after a specified time. Offer holdbacks are subject to many variables, and communication between all parties is key.
Condition Due Date
The Condition date is the deadline that a Buyer must adhere to when meeting the conditions that were in their offer. If a Buyer has not met the deadline, and the Seller is not willing to extend, their offer will be null and void.
The Possession Date is the date that the Buyer would get the keys to their new property. The possession date is specified in the Agreement of Purchase and Sale, and is legally binding.
Next, I’d like to touch on irrevocables. An irrevocable is the time that the Seller has to either accept, reject, or counter an offer. In this market, there are times when an offer may have a specified irrevocable to respond to offers.
The irrevocable time starts when the Seller’s Realtor receives the offer.
Offers with an irrevocable MUST be presented to the Seller at the earliest practicable time. This can get chaotic when multiple offers are coming in at different times.
Note that in a strong Seller’s market, the power in an irrevocable lies completely with the Seller.
Alright, let’s talk about deposits. In order to make an offer legally binding, a deposit must be received by the Listing Brokerage within a specified timeframe.
The deposit is held in the Brokerages Trust account until either conditions are met and the offer firms up, or conditions are not met.
Should conditions not be met, the deposit would be released back to the Buyer.
In legally contentious situations, the deposit may be held until legal proceedings take place.
The actual size of the deposit is irrelevant from a legal standpoint. However, there are norms depending on your market place that your realtor can advise you on.
Pre Approvals and Approvals
I also wanted to touch on the difference between preapprovals and approvals. Being pre approved by your financial institution or mortgage broker is a critical step in the home buying process. It does NOT mean that you don’t require a financing condition. WHERE your pre approval comes from also makes a BIG difference.
Automated online preapproval processes generally carry little to no credibility in today’s highly competitive market. Meeting with your lender be it virtually or in person and speaking with an actual mortgage professional is key.
Your purchase will still need to actually be fully approved by both your financial institution and mortgage insurer such as CMHC if your downpayment is 5% or less.
Finally, we need to touch on appraisals. An appraisal is an unbiased professional opinion of a home’s value. In today’s highly competitive market, it is very important to understand that if the home doesn’t appraise out, and you don’t have a financing condition, you will be required to pay out of pocket the difference between the appraised value of the home, and your purchase price.
The key takeaway here is that if you are submitting a clean offer, MAKE SURE that you have the funds to cover any potential shortfalls.
So, THAT is the basic terminology of Real Estate for Buyers that I feel will be most helpful to you as you navigate your real estate purchase.
Feel free to leave a comment in the comment section if you have any questions at all, or if there are other terms that you are unsure of!