Normally, an offer process commences with preliminary discussions and leads to preparing of a bid to acquire a real estate property. When the bid to acquire or other comparable mode is signed or accepted it transforms into an agreement or convention by means of which one party agrees to purchase a real estate property from another. The deed of the property is transferred from the seller to the buyer when the latter pays the former the mutually agreed acquirement price and the property is registered in the name of the new owner (buyer).
Here it is important to mention that the laws of the regional regulatory authorities preside over the precise procedures and prerequisites concerning the offers to purchase in respective provinces. In most provincial jurisdictions typical printed forms are available for presenting offers to purchase real estate properties. One may find the following facts useful while transacting a usual residential property.
Once the owner of a residential real estate has decided to sell his or her property, their first and most important job is to get in touch with a listing sales person or marketing agent. On their part, the listing sales persons who act on behalf of listing brokerages, finalizes the listing contract and along with the seller/ home owner determines if they would require the services of any other cooperative brokerage. In real estate transactions, the selling sales persons, irrespective of whether they are engaged by a listing brokerage firm or a cooperative brokerage, never negotiates with the seller directly as they usually work on behalf of the buyer. Hence, when the promotional sales person comes across a potential purchaser, he or she immediately gets in touch with the listing marketing agent to present the offer made by the prospective buyer. Under no circumstance will the selling sales person contact the seller directly to convey the offer.
All through the offer bargaining, there is constant contact among the seller, listing sales person, selling sales person, the potential buyer and others concerned. In fact the seller/ home owner contacts the listing marketing agent, the listing agent gets in touch with the selling sales person, who in turn contacts the prospective buyer and so on. Although own its own an offer can not be considered to be an agreement, when the prospective buyer presents an offer to the seller it expresses his or her willingness to enter into an agreement to purchase the property. An offer presented by a buyer only becomes an agreement when the seller has accepted in completely and has already written to the buyer confirming the acceptance of the bid.
It is important to note that when a prospective buyer makes an offer to the seller in writing it should be presented to the seller/ home owner as early as possible. And this aspect holds true for all types of property listings - exclusive listing, multiple or open listing. In fact, any delay in presenting the offer to the seller will affect all the sides related with the real estate transaction. In the event of a sales person deferring the presentation of an offer made by a potential buyer, the latter gets a chance to withdraw the offer depending on the phrasing of the printed offer form or the stipulated time period for accepting the offer may terminate. Hence, it is important on the part of the sales person to promptly present the offer to the seller not only to keep off complexities, but also to uphold his or her responsibilities as an honest and efficient real estate practitioner.
When the potential buyer has presented his written offer to the seller/ home owner, the latter has three alternatives at his or her disposal. The seller can agree to the buyer's offer if it satisfies his or her terms and conditions for the sale of the property and send a written message to the buyer confirming their acceptance of the purchase offer. Following the receipt of the acceptance of the purchase offer, the buyer will make the bid a lawfully obligatory agreement on both sides - the home owner/ seller and the buyer. On the other hand, if the conditions specified by the buyer in the offer do not suit the objectives of the buyer/ home owner, then he or she can reject the offer straight away or make a counter offer to the buyer.
It is essential for all offers made by a prospective buyer to a home owner/ seller to fulfill at least six aspects of a contract law in order to eventually qualify or bring about an agreement between the two parties. The six primary elements are mentioned below.
It is essential that all agreements related to real estate transactions need to be in black and white. Although the precise subject matter and the set up of the printed purchase offer forms available in various regions may vary, the basic aspects of an offer are usually same in all the areas under the different regional authorities. In some of the regions, the provincial real estate laws specify precise prerequisites regarding the basic aspects of any offer and/ or necessitate the use of a compulsory document. In the other provinces, typical printed documents are available owing to the endeavours of the neighbourhood boards and/ or the regional real estate societies. Irrespective of some specific basic aspects that may be mentioned in the printed purchase offers available at the different regional jurisdictions, the issues that are of most prominent are mentioned below.
Generally when prospective buyers have enough faith on the sales persons, he or she may ask for the agent's advice and recommendations regarding the price and other conditions that are supposed to be specified in the purchase offer. In fact, the procedures that are followed in this case are usually determined by the relationship between the agency and the concerned prospective buyer.
When a real estate brokerage is functioning on behalf of the seller/ home owner and dealing with the buyer as a client, the listing evidently specifies precise method that needs to be adopted while presenting the property for sale. It is pertinent to mention here that in the absence of any permission from the seller, no sales person representing the home owner is entitled to seek or suggest a lesser price or conditions apart from what has been specified in the listing agreement. Nevertheless, irrespective of what has been mentioned above, the sales person acting on behalf of the home owner is entrusted with the realistic job of bargaining the conditions specified in the purchase offer presented by the prospective buyer eventually during the course of taking care of his or her client to sell their real estate property. A simple method of dealing with the circumstances is to openly ask the prospective buyer about the precise amount that he or she is ready to bid for acquiring the home. If the prospective buyer suggests an absurd price and unreasonable terms and conditions for acquiring the property, then it becomes the responsibility of the sales person to discuss with and explain to the potential buyer the end results of presenting an offer like that. Although a sales person working on behalf of the home owner will always want to secure an acceptable or the highest price for the seller, it is also his or her duty to be rational and just with the prospective buyer. In brief, the responsibility of a sales person is to convince the buyer regarding the real estate deal and not impose things on him or her.
On the other hand, in the instance of the buyer brokerage association, the sales person is obliged to carry out his or her responsibilities towards the buyer with trust so that they always have their clients' interest in mind. It is the responsibility of the sales person to protect the interests of the buyer in the transaction and help him or her to acquire the property at the most feasible price. Nevertheless, at the same time it needs to be borne in mind that it is the buyer who has the prerogative to eventually take a decision regarding the offer to be presented to the home owner/ seller. If the buyer offers an absurd or too small price for the property to the seller, it is most likely that the bargaining course will begin on a wring note and may finally mess up the negotiations with the seller. Similarly, offering a higher price may have a negative effect on the buyer who will end up paying much higher than the prevailing market price. Apart from these, one must also bear in mind the likelihood of competing offers from other buyers for the same property.
The fundamental idea of any agreement includes an offer made by one party to another requesting the latter to acknowledge the essential or necessary stipulations specified in the proposal. The party that makes the offer is known as the offeror or the buyer, while the party to whom the offer is being presented is also known as the seller of the offeree. When the seller shows his or her consent to the proposal, then the offer is said to have been accepted by the offeree. When the offeree confirms his or her acceptance of the offer to the buyer/ offeror in writing it leads to an agreement and makes it obligatory for both the seller and the buyer to abide by the terms and conditions specified in the offer. However, an offer ought to include some fundamental aspects in order to be eligible for acceptance by the seller. These basic elements of an offer are discussed in brief below.
It is important to note that the party or side making the alteration is only entitled to effect a modification to a purchase offer. Moreover, no modification or amendment is allowed once the offer has been accepted by the seller and both the parties have entered into an agreement regarding the sale of the property. Nevertheless, there is scope of amending an agreement provided both the parties - the seller and the buyer - mutually agree to it. The normal clauses of the agreement for preparing purchase offers for commercial and/ or housing may be availed from the regional regulatory authorities or even the real estate associations.
After the seller has accepted an offer presented by the buyer, the two parties enter into a written agreement regarding the sale of the real estate property. Once the agreement has been signed, everyone involved with the deal is supposed to get a copy of the accepted offer in addition to one copy for the listing agent and another for the selling brokerage. It is essential to provide the copies to the concerned persons at the earliest possible time. According to the normal practice, the listing agent retains the original accepted offer document. Another widespread practice in the real estate business is to send one copy of the accepted offer to the attorneys of the buyer and the seller.