So you finally found the home you want to buy. What are the next steps? How do you go about buying that home? In this episode, we discuss how to make an offer on a home and the steps involved. We also explore how counter offers work and how the process is different when buying a resale versus a new home. Finally, we look at if it costs money to make an offer on a home.
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Hi everyone. I'm Karl, and welcome to another Homebuyer's School video, a channel where you get the latest strategies, tactics, and tips from home buying experts.
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Today I'm joined [00:00:30] by Jessica McNabb, Area Manager with Brookfield Residential. And the question we're going to answer today is:
How do you actually make an offer on a house?
Jessica, do I just go up to either the seller or a new home builder and say, "Hey, I want to make an offer with us. How does that process go?
There's two different scenarios.
Let's say on the new home side of things, you're in the show home, you meet with the area manager or the sales rep, and you've selected your lot already, and you've looked at the certain upgrades in the home.
[00:01:00] You're then going to sit down and do your paperwork and submit your offer together.
Karl Yeh: Okay.
- How that works is you're going to have a $1000 down, and it's refundable.
- You'll do your paperwork.
- You'll come up with all the inclusions, all the upgrades that you choose.
- You'll have your lot selection in there.
- You'll sign off.
- And that will be 14 days of a time period of when that will be accepted or countered by the builder.
- at the 14 day mark, you will then put your remainder of your 5% down.
- [00:01:30] And in that actual 14 days, what you're going to do is ensure that your paperwork has gone to your mortgage broker or lender.
Oftentimes the area manager or sales rep will actually send it on your behalf. And they'll start working on it, so you have to have your approval done by your lender.
Karl Yeh: Yep.
Jessica McNabb: And before that-
... And it's obviously usually the best thing to actually talk to your lender before coming in to-
Jessica McNabb: For sure. Yep. Yep.
Counter-offers from the home builder
Karl Yeh: .
.. a sales center, right? You talked about counter offers from the builder. What does that mean?
Let's say you've decided that you wanted to submit an offer on a home.
It doesn't hurt to submit an offer.
When [00:02:00] you've submitted it, it's going to go to head office for acceptance and management will take a look at the offer, look at comparables in the area, and once it comes back, it's either going to be accepted by them or countered.
Karl Yeh: Is that ...
How is this process different than when you make an offer to just a resaler?
When you're making an offer on a resale home, usually you have a realtor that's working on your behalf and the realtor will come up with the price, also based on comparables in the area.
They'll submit it to the other [00:02:30] realtor, and then the seller will decide what they sell that price for ... that home for.
What about counter offers?
Let's say you put an offer into a home, let's say a new home, and then somebody else in that 14 days that you put in your $1000 down payment or $1000 down, can somebody else put an offer in, and can the builder sell to that person?
The way that our builder works is when somebody first submits their offer, they've got [00:03:00] their 14 days condition period-
Karl Yeh: Oh, okay.
Jessica McNabb: ... to make their decision, so another offer can't come into play-
Karl Yeh: Got it.
But on a resale home, it's up to the seller, so if there's multiple offers, and multiple prices coming in, it's up to the seller, in which they wanna accept.
Does it cost money to make an offer?
It does. Yeah, typically, on a new home, it costs $1000 down, and it is refundable.
On the resale side, it's usually at a minimum $5000 down, which is also refundable.
Can you put an ... I guess you've answered ... [00:03:30] you can't really put an offer on a house that's already conditionally offered-
Jessica McNabb: Right.
Karl Yeh: ... especially a new home, right?
Somebody can always put up a backup hold on it, but you can't re-offer, so a builder won't take somebody's higher offer than yours.
Karl Yeh: Oh, okay.
And typically with a builder, the price is already set, so if somebody's willing to put in an offer, it won't necessarily get accepted, but it doesn't hurt to ask.
Perfect. Do you have anything else in terms of making an offer on a home?
The most important piece is that, that 14 day conditional period is taken [00:04:00] seriously, and that it ... the paperwork is sent to your lender.
Because by that 14 days, if you don't have your approval letter from the bank, another person can come through and put in their offer, and a part of submitting your documents to the lender; the lender is gonna ask you for employment letter, then ask you for T4s.
Sometimes it can take a week just to get your letter of employment from your employer so there are things to think about, even though 14 days sounds like a long period of time, it does go by pretty fast.
Karl Yeh: [00:04:30] Perfect.
Jessica McNabb: Yeah.
The question of the day I have for you is:
Do you have any additional tips on making an offer on a new home or a resale home?
Let us know in the comment section below.
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About Jessica McNabb:
University of Alberta: Bachelor of Science in Registered Nursing 2011 McConnell Place North Alzheimers Care Centre 3 Years - Client Care Leader Brookfield Residential 6 Years - Area Sales Manager Sold over 200 Homes
While a career in Nursing was extremely fulfilling, I also wanted to explore a career in home sales. After 6 years of being in the New Home Sales Industry, I still feel the same sense of fulfillment through taking clients from start to finish building their home.