The offer, annotated

A FOUNDRY COMPANY FIELD GUIDE · NO. 05

An offer is a set of terms and price is one of them. The other four are the deposit, the conditions, the dates and the inclusions. A seller reading two offers on the same evening reads all five columns, and the offer that wins is frequently not the one with the largest number at the top.

The price is one term of five

It is the number everyone watches and the one every headline reports, and it does a narrower job than its prominence suggests. Price sets what the seller receives. It settles nothing about when they receive it, what has to happen first, or what they are permitted to take with them when they go.

The useful way to think about price is as the term that is hardest to move once written, since a change to it reopens the whole negotiation. The other four move more easily and cost less to move.

The deposit is your good faith in writing

The deposit is money the buyer puts up on acceptance to demonstrate the offer is serious, and it forms part of the purchase price at closing rather than sitting on top of it. It does not go to the seller on acceptance, and it is released toward the purchase price at closing. The standard Alberta contract names a trustee to hold it, in practice usually the listing brokerage, and its deposit section is written as the terms of a trust.

The trustee has to put it into a designated trust account within three business days of receiving it, and it is held in trust for the seller and the buyer both rather than for either one. Under the Real Estate Act a brokerage trust account is interest bearing, kept separate from the brokerage's own money and held on deposit in Alberta, and the interest it earns goes to the Alberta Real Estate Foundation. Neither party receives it.

To a seller comparing offers on a Tuesday evening, the deposit is the clearest available signal of how firm a buyer intends to be. A buyer who is unsure about the property tends to write a small one, and the seller reads that accurately.

The deposit also has a timing dimension people miss. When it is due, and how quickly it has to be delivered after acceptance, are written into the offer alongside the amount, and a buyer whose money sits in an account that takes days to release should know that before they sign rather than after.

The conditions are what still has to be true

A conditional offer is an agreement that becomes binding once a listed set of things turn out to be the case. Financing. Inspection. Condo documents where the property is a condominium. The sale of a home the buyer already owns. A lawyer's review of title. Each one is written in with a date, and the date is the part that decides everything.

Conditions are escape hatches you hope never to need, written in before you need them. They are also the reason a firm offer with no conditions carries weight, and the reason writing one is a decision to make with advice rather than in the moment. What to notice on a first viewing is where the questions a condition later answers get collected.

The dates decide when the keys change hands

Two dates carry the contract. The condition deadline, which is the day the offer either firms up or ends. And possession, which is the day the money moves and the property changes hands. Both are written as calendar dates and both are the lines a seller reads first after the price.

Dates are where a negotiation frequently has the room the price does not. A seller who has already bought their next place needs a possession date that lines up with it, and a buyer who can supply that date is handing the seller something real without spending anything. What actually happens on possession day covers the second of the two dates hour by hour.

The inclusions settle what stays in the house

The fridge, the blinds, the garage door opener and its remotes, the shed, the wall-mounted television bracket, the washer and dryer. Anything a reasonable person could argue about goes on the list or comes off it, in writing, before anybody signs.

This is the smallest term in the offer and the one that produces the largest share of the bad feeling. Small print now beats a small argument later, and the argument is always on possession day when both parties are tired and the truck is outside.

The test is whether an item is attached. Anything fixed to the house is generally understood to stay and anything unattached is generally understood to go, which sounds clear until somebody has bolted a bookcase to a wall or hung a chandelier they inherited. Write down every item either party would be upset to lose.

Five terms, and four of them are negotiable in ways price is not

An offer is a proposal about a relationship between two households and a calendar. Reading it as a single number throws away four of the five levers available.

We build offers line by line. That is the whole method and there is nothing else to it.