Just because you “absolutely love” a home may not be reason enough to make an irrevocable, firm offer.
Real estate prices in Ontario are high and competition for properties is intense. Home prices increase all the time, or so it seems. Watch your home buying isn’t motivated purely by emotions.
Axess Law explains real estate law in Ontario when your feelings get the better of you. Let our licensed real estate lawyers review your offer to purchase before you are committed.
What is a Firm Offer in Real Estate?
Ever see a home you just can’t resist? Emotional purchases are like that — spur of the moment, on the spot decisions.
A firm offer can give you a decided competitive “edge.” But think of the risks it creates. Without due diligence before you buy, you could be getting more than you bargained for.
Risks of a Firm Offer (Ontario)
If you’ve signed an agreement of purchase and sale and are now wondering what does a firm offer mean in real estate, here’s what to expect.
Pros of Firm Offers
- Your offer goes to the front of the queue. A generous deposit and firm offer trump other bidders with less upfront cash to commit. How to write offers in bidding wars.
- Home inspection and mortgage financing subject-to clauses can delay or stop a real estate sale. With your firm offer in hand, the vendor makes a quick sale and moves on.
- Where they apply, new home warranties cover most things your contractor overlooked or left out. You can usually count on your Tarion warranty to guarantee your home is acceptable and ready to move into. Making a firm offer may be less risky when you have a warranty to back it up.
- Firm offers close faster. Axess Law can finalize your sale quicker because you don’t have to wait for financing or other conditions to be satisfied. When school starts soon or you need to move for a job, making a firm offer gets the deal done.
Cons of Firm Offers
- In the heat of the moment, have you checked out what your new home is worth? Mortgage lenders only finance a home up to appraised value. You pay the difference between your offer and a property’s actual market value.
- Pre-approved mortgages are only an offer, not a fait accompli. Your lender could approve you for less than you bid or not all, leaving you scrambling to close on time. Sellers don’t have to agree to extensions or return your deposit.
- Patent defects overlooked during your home tour can be forgivable. It’s easy, though vexing, to fix a few cracks here and there. On the other hand, carpenter ants gnawing away at the basement beams expose you to financial and legal liabilities.
- Latent defects are not easy to spot, even for experienced home inspectors. Leaving out a home inspection clause leaves you paying for major repairs your new home may need for your health or safety, like removing hazardous asbestos flooring or ceiling tiles.
- Fire and floodplain insurers are reluctant to cover homes that pose extraordinary risks. Your premiums could go way up or you may be left having to sell yourself if a home has aluminum wiring, is next to a flood-prone area or is in “tornado alley.”
When to Make Firm Offers
Before you make a firm offer with no conditions, revisit a home you feel emotional about. The risks of making firm offers are serious and substantial. Our suggestion — only make a firm offer if:
- You have construction skills or an experienced do-it-yourselfer.
- You can afford to fix potential defects.
- You understand the risks.
- You won’t require financing or can borrow from family if needed.
Understand your rights – buyer’s right to cancel.
Why You Need Legal Advice
When you sign an agreement of purchase and sale, you are making a legally binding offer you may not be able to back out of without a legal penalty. In fact, if you walk away from a firm real estate offer, you could be liable for the difference between your offer and what the next buyer pays.
Avoiding Legal Costs
You may even be asked to pay the seller’s moving and storage costs if a decision to quit the contract results in extraordinary expenses the seller didn’t anticipate. See when a deal falls through who keeps the deposit.
Withdrawing an Offer
Hiring a lawyer can help preserve your right to back out using a home inspection clause or if unfavorable financing make a real estate deal undesirable after all. Axess Law real estate lawyers near you review and recommend clauses that make your offer to purchase conditional. We explain real estate law in Ontario to help you understand your legal rights and obligations.
See why the wording of home inspection clauses affects your rights.
We can amend your contract or negotiate with the seller’s lawyer to buy you more time to get financing. We ask the seller to pay for repairs you shouldn’t have to bear or reduce the selling price to allow you to fix defects a home inspection reveals.
Discharging a Mortgage in Ontario
Once your offer is accepted in writing, Axess Law’s real estate lawyers in Ontario liaises with your realtor and bank, credit union or private lender to discharge existing mortgages and finance your new home.
Property Title Searches
We search titles to your new property for any legal obstacles that could delay or prevent the sale. Your real estate transaction is completed just in time to give you the keys to your new home.
Do You Need a Lawyer for a Buyer’s Agreement?
You may have been asked to sign a binding exclusive buyer representation agreement (BRA) with a realtor. We prevent misunderstandings or potential conflicts of interest by reviewing the agreement, before or after you sign. Only a licensed Ontario lawyer can answer legal questions you may have.
Affordable Legal Services for Home Buyers
Axess Law has flat rate legal services when you need them. We keep our legal rates low by offering you only the services you require, with no hidden charges or surprises.
You pay just $999.99 and up plus HST to buy a home in Ontario or $799.99 and up plus HST for property sellers. We can transfer title to a property starting at $649 plus HST or refinance your mortgage for $799.99 and up plus HST.
Ask about our all-inclusive legal services.
Book Virtual or In Person Appointments
Axess Law lets you remote in by secure video call. Experienced virtual real estate lawyers are available day or evening, anywhere in Ontario. We meet online with you in the convenience of your home or office and, once we verify your identity, e-sign real estate closing documents by email.
Book online with our easy web form or call our 1-647-479-0118 lawyer line (toll free at 877-522-9377) to make appointments 7 days a week. Our real estate lawyers (Toronto, Greater Toronto Area and Ottawa) meet with you at your convenience at Axess Law locations wherever you are.
We have onsite parking and easy transit access.