How to respond to an offer to purchase
Last updated on January 23, 2024
It’s happened: a buyer is ready to make an offer to purchase your property! At this point, you have several options open to you. And remember, you’re not required to make a decision right away.
Here is everything you need to know to adequately respond to an offer to purchase, sometimes called a promise to purchase, and the options available to sellers upon receipt of this official contract.
Contents:
- Response time to an offer to purchase real estate
- Take time to consider
- Make your decision
- Accept the offer to purchase
- Submit a counteroffer
- Refuse the offer to purchase
- Notify the buyer
Let's start off by listing the important information contained in the offer to purchase:
- The price offered
- The date of occupancy and date of the notarial deed
- The financing arrangements
- The conditions (obtaining financing, inspection of the building, sale of the property of the purchasing party within an agreed period, water analysis, reading of the declaration of co-ownership)
- The inclusions and exclusions
Response time to an offer to purchase real estate
Once you have the offer in hand, begin by checking how much time (usually 1 to 10 days) you have to accept this offer on your real estate. Thank the buyer for their interest and let them know you will think it over before following up on the offer. Schedule a meeting to get together with the person again.
When you receive your offer to purchase, there are several points to bear in mind. First of all, you need to examine the proposed price in relation to the established asking price. It is important to scrutinize the conditions, special clauses and closing date indicated by the purchasing party. Interesting details about their financial situation are also presented. Diligence is crucial to making an informed decision.
Take time to consider
At this stage, it’s a good idea to call a DuProprio notary* or a notary in private practice. With their input you can check and fully understand all the clauses in this commitment to purchase. This will help you decide whether it truly meets your needs.
Make your decision
There are three possible responses you can give the potential buyer: accept the offer, make a counteroffer or refuse the offer. But be careful: not responding within the set-out timeframe will cancel the offer to purchase.
Accept the offer to purchase
If you agree with the terms included in the offer (price, conditions, occupancy date, etc.), you can choose to accept it. That’s the best scenario. Just remember than an accepted offer to purchase becomes an irrevocable contract. That means you must comply with the terms and conditions of the sale given in the document as well as their time frame.
However, accepting the purchase offer doesn’t necessarily mean that the house is sold. If there are conditions included in the offer to purchase, they must be met before you can put the “J’ai vendu” sticker on your sign.
The 3 steps once the offer to purchase has been accepted
- Signing the sales contract : Once the offer has been accepted, both parties sign a sales contract. This document contains all the details of the transaction, including purchase price, payment terms, closing date, contingencies, etc. The buying party is usually required to pay a security deposit (also known as a down payment), which is a sum of money given to the selling party to guarantee the intention to purchase. This deposit is usually held in a trust account until the sale closes.
- Realization of conditions : The specific conditions included in an offer to purchase must be fulfilled for the sale to become official. The buying party must therefore, depending on what they have indicated, have the property inspected, obtain financing, sell their current property, verify title to the property, perform a water quality test, etc. The selling party, on the other hand, must obtain financing, sell their current property, verify title to the property and perform a water quality test. The selling party, on the other hand, may have to produce a new certificate of location or carry out renovations.
- Closing and transfer of ownership: Once all contract conditions have been met, the parties meet for closing. This is when all financial transactions are finalized, notarized deeds are signed and ownership is officially transferred from the previous owner to the new owner. The keys to the property are handed over.
The 72-hour clause
In the event that a promise to purchase is conditional on the sale of a property, it is possible to accept it while leaving the door open to a second offer to purchase. If all the conditions of this second offer are fulfilled before the first, the selling party must send a notice to the person responsible for the first offer and obtain an acknowledgement of receipt from the latter. This person then has 72 consecutive hours to inform the selling party in writing of his or her decision.
The first buyer has two choices:
- Cancel all conditions of his or her offer to purchase that have not been fulfilled, including the condition of sale of his or her current property. He or she must be able to confirm that he or she has the necessary financing to purchase the property.
- Cancel the offer to purchase.
If the first buyer does not notify you of his decision within 72 hours, his offer to purchase is automatically cancelled. Find out more about the 72-hour clause in our article on the subject.
Submit a counteroffer
How do I make a counteroffer?
You’ve read the offer and you’re fine with most of the terms, but not all? You can make a counteroffer to the potential buyer, in which you can modify the terms and conditions listed in the initial offer to purchase. For example, you can say you agree to all the terms but would like to receive a different price than the one offered.
To keep from going back and forth with counteroffers, it is in your interest to negotiate the terms in person. Speaking with the buyer will make it easier for you to come to an agreement that can then be put on paper in a new offer to purchase.
Counteroffer template
1. Selling price: We appreciate your initial offer of [Offer amount]. However, we are prepared to accept [New counter-offer amount] as the selling price.
2. Closing Date: The closing date proposed in your offer is [Proposed Closing Date]. We prefer to close on [Proposed new closing date], for [explain reasons, if any].
3. Inclusions/exclusions: [Amended list of inclusions/exclusions, if applicable].
4. Other conditions: [Add any additional conditions you wish to include].
Refuse the offer to purchase
If you’re not satisfied with what has been offered, use tangible reasons and clearly explain why you are refusing the offer. For instance, you might say that the offer price is not in line with the analysis of comparable properties you have. The buyer then has the chance to reconsider their position and come to a reasonable compromise.
How do I respond to a low bid?
When a seller receives an offer that is considered too low, it's a good idea to respond strategically. It's advisable to remain professional and open to negotiation. One possible response could be to express gratitude for the offer, while explaining that the price is outside the expected range. The selling party can then indicate his willingness to discuss a price closer to market value and encourage a counter-offer. This opens the way for discussions without compromising the transaction.
Notify the buyer
How do I write a response to an offer to purchase?
The selling party can express gratitude, politely explain any necessary adjustments, and propose a specific counter-offer. Showing flexibility while maintaining a professional tone and setting an expiry date for the response should encourage constructive negotiations. Regardless of your decision, indicate it by checking the right box in the Seller’s Reply section in the Offer to Purchase document :
If you are accepting the offer, do what you can to finalize the transaction as soon as possible. If a problem arises, remember the only professionals authorized to provide legal advice are a DuProprio notary,* a private practice notary or a lawyer.
Did you know? The DuProprio website lets you search for properties to buy! What's more, if you need to sell before you buy, our professional team can offer you the visibility and support you need to make your real estate transaction a success. To find out more about our services, watch our video or schedule a call with one of our advisors.
