Winnipeg's Real Estate Blog

Buyers: How to write a 'winning offer'!

In the 'ol days' of real estate (5 or more years ago), if a home-buyer had a great, gung-ho agent, he might get lucky and find a home that no one else had seen yet.  Put in a quick offer and beat the rest of the buyers to the punch.

These days, with home-sellers and their listing agents doing the "Showings Start on the 11th,  Offers on the 15th", beating the rest of the buyers is no longer an option.  If it happens to be a nice home and reasonable priced, the buyer can almost be certain that he WILL be competing against other buyers for this home.  So how to win such a competition?

First and foremost:  keep the offer clean!  As few 'conditions' as possible is a good way to start.  Here are some of those conditions:

Subject to Financing:  If a buyer needs to put this condition into the offer, it is a good idea to keep the amount of time required for financing as low as possible.   Example:  "Subject to mortgage approval within 1 or 2 days"  is not uncommon, whereas 'subject to 1 week' would work against the buyer.

Subject to a Home Inspection:  As a "Buyers Agent" I would LOVE to get this condition approved.  Let's face it: it would take the pressure off the buyers agent, as we now have a certified Home Inspector give the house the 'thumbs up'.  If anything goes wrong down the road, the "Buyer Agent' can say: Well, we DID have a home inspection", thereby absolving himself from responsibility.  Having said that, getting this condition accepted in a multiple-offer situation is difficult, to say the least.  That does not mean there is anything wrong with the house, necessarily.  However, when faced with other, unconditional offers, owners are more likely to accept those in favor of a 'home-inspection' offer.

Subject to the Sale of Your Home:  In the 'ol days, this was quite common, whereas in this sellers market, we rarely, if ever see such an offer, let alone have it accepted.  The reason for this is simple:  The home-owner is going to say "If the buyer does not think he can sell him own home, why would I take the chance for him?"

In addition to keeping the offer clean, it is advisable to accomodate the home-seller as much as possible in all other aspects.  If the listing does not include appliances, DONT ASK FOR THEM.  If the listing suggests a possession date of Aug 15th, DONT ASK FOR JULY 20th. 

These are just some general guidelines, and I hope you have found them useful.  Especially for first-time buyers, or people who have not bought a home in the last 3 or 4 years, it is highly advisable to seek out a qualified Buyers Agent, preferrably one with the A.B.R. designation (Accredited Buyer Representative).

House measurements: Rules of the Tape!

There seems to be some confusion, even among Realtors, as to how a home is measured.  With the many different styles of homes on the market, questions can arise as to whether a basement can be counted as part of the official square footage of a house.  We'll take a look at the different styles of homes and the rules as they apply to each.  Here are a couple of general points:

The home is measured at the outside:  in other words, all exterior walls are part of the total square footage.  To put it another way, we are looking for the 'footprint' of the house (or condo).

Garages, (even heated ones) do not count as part of the living space.

Sunrooms count only if they are heated and used year-round.  So solariums with single pane glass and no heaters are not included.

Basement levels ONLY COUNT if there is another space, such as a crawl space, below them.

Here are the different styles of homes:

Bungalow with full basement:  In this style of home, the basic 'footprint' counts as the size.  So measure the outside dimensions.  Basement does not count.

Bi-Level:  This is basically a 'raised bungalow.  You typically enter into a small landing, and then go up 6 steps to the main living area.  Going down 6 steps brings you into the basement level.  This type of home is very attractive, as the basement is very high out of the ground, and features very large windows.  However, since the basement level is the lowest level in the house  (no crawl-space under it) it DOES NOT count. 

Two-story, 1-1/2 or 1-3/4 story:  These typically feature a living room, kitchen, dining room on the main floor, with bedrooms and bath(s) on the 2nd floor.  In these homes, BOTH of these areas count.  The basement again, does NOT.

3-level splits:  These homes typically feature living room-diningroom-kitchen on one level.  From there you go up about 6 to 7 steps to the bedroom level.  From the living room, you can also go down to the basement level, which is located directly beneath the bedrooms.  This 3-rd level does NOT count, only the upper two count as part of the square footage.

  4-level splits:  Ok, working from top to bottom:  The top level would have the bedrooms, then go down 6 steps to the living room-diningroom-kitchen.  Down another 4 steps to a rec-room level, and down another 6 steps to the basement.  Here the top 3 levels count, since that 3rd level (the recroom) will have a crawl space under it, but the lowest level (the basement) is on a concrete floor with nothing beneath.

As for Condos, for townhouse and stand-alone units, the same rules apply.  With apartment style condos, you measure the interior measurements PLUS part of the seperating walls between the units.  You actually get to use the entire wall thickness for the wall seperating your condo from the hallway and the outside airspace.  The seperating walls between you and your neighbours are used at half-thickness. 

Mortgage Pre-Approval and C.M.H.C.: What Buyers need to know!

Being pre-approved by a mortgage lender is, today, the absolute minimum requirement before looking at, or making offers on, homes or condos.  In this day of 'multiple offers', homeowners can not take your offer seriously unless they know that you are pre-approved by a lender.  But there is a bit more to this story:

In Canada, Banks are permitted to loan out (mortgage) up to 75% of the value of the home.  For a $160,000 home, they can loan out up to $120,000 to the buyer.  The rest, in this case $40,000, has to come by way of a down-payment, or be insured by a Mortgage Insurance Company.  In Canada we have Canada Mortgage & Housing Corporation (CMHC)  and GE Mortgage Insurance Canada.

Here is how it works:  Mr. & Mrs. Smith want to purchase that $160,000 home, but only have 5% down payment ($8,000).  This means that they will require the above "Mortgage Insurance", and CMHC or GE will be happy to do so, provided that the Smith's qualify (i.e. have a clean financial history, with no defaults or bad credit).  Of course, either company will charge for this service, and this amount, usually several percent of the value of the mortgage, will be added onto the monthly payments.

Here is where it gets interesting:  Banks (or Credit Unions for that matter) may 'pre-approve' the buyers, but they can not speak for CMHC or GE.  The final word is up to these insurers.   So we could have a situation where the Smith's are pre-approved, and their offer is accepted, however once the entire deal is shipped to CMHC (or GE) for approval, it could still fall apart.

If that happens, the Smiths could loose their deposit, if they were not careful in how their offer was worded.  For example, if they wrote an 'unconditional offer', and CMHC denies their application, they will not get a mortgage, will not get the house, and thus loose the deposit.

Must Read:  Deposits: Why do we need it and is it safe?