Crafting an offer in Toronto’s real estate market is an art that requires strategy, knowledge, and a clear understanding of your financial limits. When making an offer, it’s crucial to know it’s not solely about the price. It also consists of essential components like deposit amount, closing date, conditions (such as financing or home inspection), and any included items like appliances or fixtures. Once submitted, the seller may accept your offer, reject it, or provide a counteroffer. Expect some back-and-forth negotiation, which is quite common in this competitive market. Remember, a clean offer (one without many conditions) will be more attractive to a seller, even if it’s not the highest bid. Working with a skilled real estate agent who knows the Toronto market well can be invaluable during this process. They can help craft a compelling offer that balances your interests with the competitive realities of the market.

Components of An Offer:

• Price: The most important part of any offer. Often a buyer will offer less than they are willing to pay, and a seller will sign back an offer at more than they are willing to accept. The price on the offer will be changed back and forth until some even ground is found where both the buyer and seller are happy.

• Deposit: A deposit is money that a buyer puts forth to show the seller that they are seriously interested in their property. There is no set amount that a deposit must be, but a higher deposit will strengthen your offer. 5% of the purchase price is a general rule of thumb in Toronto.

• Completion Date: This is the date that the property will switch hands from seller to buyer. A buyer with a flexible closing date has a great bargaining chip in their hand. Sometimes a seller wants to get rid of a property immediately, and if a buyer is willing to take possession right away their offer will be stronger.

• Inclusions/Exclusions: Simply put – what is included or not included with the purchase price? Things like stove, fridge, lights, and patio furniture can turn up in this section.

• Conditions: Certain conditions will often be included in an offer. It is important to conduct your due diligence when purchasing any real estate. In most cases, this includes making your purchase of a house conditional on a home inspection, or for condo purchases, conditional on the status certificate being reviewed by a lawyer. Moreover, it is always advisable to insert a financing condition in your offer for any type of Real Estate. In certain market conditions, it is advisable to clean up your offer as much as possible by limiting conditions. Removing these conditions always strengthens an offer from the seller’s perspective. 

• Financing Condition: A “conditional on financing” clause protects you in the case that you cannot obtain proper financing once the offer has been accepted. There are a number of issues that can come up during the full approval process, some of which have nothing to do with the borrower, but without this clause, you are at risk of losing your deposit if the mortgage financing does not come through.

• Home Inspection Condition: The simplest form of this condition provides for a satisfactory inspection report at the buyer’s absolute and sole discretion. A home inspection involves an inspection of the physical structure and mechanical systems within a residential structure having specific regards to the roof, attic, walls, floors, ceilings, window, doors, insulation, and all other visible components of the structure, along with the condition of heating, A/C, electrical, plumbing and other systems. 

• Review of Status Certificate Condition: Every condo corporation produces a ‘status certificate’, which basically outlines the ‘financial health’ of the building. Among other documents, the annual budget, reserve fund and any particulars of lawsuits or special assessments will be disclosed in this package. Your lawyer will have a chance to review it and summarize their findings with you, the purchaser before you move forward with finalizing the purchase.