Making an offer on a home: price, conditions and deposit

An offer is a written proposal to buy a home. Once the seller accepts it and any conditions are met, it becomes a binding contract, so it is worth understanding each part.

The short version: your offer sets the price, deposit, closing date, inclusions and conditions. Conditions let you back out without penalty if they are not met by their deadlines.

What an offer includes

• Price and the terms of payment.
• Deposit, typically a few percent of the price, held in trust and applied to your purchase.
• Closing date, when ownership transfers.
• Inclusions and exclusions, such as appliances, light fixtures and window coverings.
• Conditions, with deadlines.
• Irrevocability period, which is how long the seller has to respond. After it, the offer expires.

Conditions

Conditions let you back out without penalty if something is not satisfied by a deadline. The most common are:

• Financing, so you can confirm your mortgage.
• A satisfactory home inspection.
• For condos, a review of the building's financial documents and rules.
• Sale of your current home, if you must sell first, though this makes your offer less attractive.
• Insurance, so you can confirm coverage.

How the offer is answered

The seller can accept, reject or send a counter-offer that changes the price or terms. You can accept it, reject it or counter again. Each counter replaces the previous offer.

Example

• Offer: $650,000, deposit $25,000, closing in 60 days.
• Conditions: financing in 5 days, inspection in 7 days.
• If the inspection finds a major problem within 7 days, you can walk away and get your deposit back.
• If you waive conditions to compete, you are committed even if problems appear.

After acceptance

• Meet each condition and sign the waiver or removal document by its deadline.
• Pay the balance of the deposit if required.
• Complete your mortgage paperwork and keep your financial situation stable.
• Work with your lawyer on title and closing.
• Do a walkthrough before closing.

Watch the deadlines

Conditions have deadlines. Missing one can mean losing your protection, so keep track of the dates and let your agent and lawyer know early if you need more time.

What can go wrong

The exact outcome of a missed deadline, a failed financing condition or a deposit dispute depends on your contract and your province. A refund is not automatic in every situation, so do not assume it. Ask your lawyer before you sign.

In Québec, the process uses a promise to purchase and a notary, and details differ, so ask your agent or notary how it works there.

Our Property Calculator can give you a quick reference value before you decide on a price, but the final number should come from comparable sales and your own budget.