You’ve found an investment property that’s within your budget. You’ve evaluated it and determined exactly how much you’re willing to pay for it. Then, you find (or maybe even look for) a reason to back out; Thoughts like these go through your mind: “oh they won’t go for my price”, or, “the price is too low, they must be hiding something”.

I get it; putting in an offer to purchase for a property can seem like a giant task. It’s one of the biggest investments you’ll make in your lifetime, if not the biggest. Of course it can be daunting, and you might find that any reason to back out, is a good reason.

It doesn’t have to be this way though. Let me walk you through the 4 most important steps I take for all the real estate deals I present offers to purchase for. You’ll see how they can protect you in a multitude of ways, and give you the opportunity to decline completing the transaction without any penalties, should you choose to.

Let me show you how you can have peace of mind and proceed with confidence when purchasing residential or commercial real estate.

1. Always work with a certified real estate agent who you trust, and who understands your needs:

When the times comes to prepare your offer to purchase, it’s best to leave it to an industry professional. A certified agent has done this many times before so they’re qualified to help you navigate the form. They’ll also contact the seller (or the seller’s agent or broker), to get additional information about the property, which might influence your decision about what price you offer. It’s important to note though, that you’re still the one who is responsible to review the offer thoroughly before signing, as it is after all, your offer.

So far, the first tip didn’t cost you anything, and for sure, would save you time, money, and potential aggravation. The same goes for Tip #2.

2. Visit the property and review the documents:

When the offer is being written up, ask your real estate agent to include a condition (also called a clause) which says that following an accepted offer, you’ll have the right to visit all the units of the building, or the house, and review all the documentation which pertain to the property. If after doing so, for any reason you’re not satisfied, you’ll have the legal option to back out of the offer without penalty or recourse.

Don’t worry, you’re not prying by asking to review these documents. They are part of the paperwork your lending institution would need anyway, when you apply for financing. This will give you a chance to do your due diligence and validate your original valuation.

The documents of interest to review when preparing an offer to purchase, are copies of:

• Any current leases (and any other revenue-generating contracts)
• Current property (municipal) and School Tax assessments and bills
• Snow removal contracts
• Landscaping contracts
• Maintenance contracts
• Major renovation or repair bills already performed or in the midst of (such as: window, roof, electrical etc)
• Insurance bills
• Any other expenses the seller(s) are indicating on the real estate listing

3. Inspection:

If you’ve gotten this far, it means you’re serious about purchasing. Aren’t you glad you took the first 2 steps, risk and cost-free?

At this stage of the offer, there does arise a small cost, but it could potentially save you BIG dollars down the road!

Now’s the time where you will go back armed with a professional building inspector who performs a rigorous and thorough building inspection, top to bottom, inside and out, and documents all the findings in a comprehensive inspection report. Copies of this report are then supplied to both you and the seller. It details the entire status and ‘health’ of the building, complete with sound recommendations for any potential future repairs and their associated costs.

4. Financing:

Getting finance secured (a mortgage) can take awhile, so this step should begin almost immediately with your mortgage broker. As you move through the process, you’d continue to provide them with updates.

I like to prepare my broker about an upcoming deal after I’ve visited the units and received all the documents. This ‘heads-up’ gives him a chance to open a file for the transaction, but I don’t give him the go-ahead to proceed with the full paperwork until after the inspection has been completed and I’m satisfied with the outcome. 

These 4 fundamental points are my ‘must-haves’ for all my offers. Following these 4 guidelines gives me confidence because they ensure that I can legally cancel even an accepted offer to purchase without any penalty, and without any expense beyond the cost of the building inspection.

Note that the tips above don’t only give you the option to back out of a deal, but they also pave the way for you to ask for a price reduction, if for example, the insurance isn’t adequate, or the inspection has revealed costly issues with the building.  

I hope these guidelines have helped you. What points are on your list of must-haves when preparing an offer to purchase? I’d love to hear from you. Please share your thoughts and experiences in the comments section below.