Dear David,

How does a Realtor know what to put in an offer? – JUST CURIOUS

DEAR CURIOUS: The question of what to put in an offer is something I consider each time I sit down to write one. Here in Ontario, nearly every offer consists of two basic parts: an Ontario Real Estate Association (OREA) standard agreement, and a “Schedule A”, which is drafted by the agent with clauses tailored specifically to the client and the property.

An agent will begin their offer by selecting the appropriate OREA standard agreement form. OREA provides unique forms for each property type, including new and resale freehold homes, various styles of condominiums, and commercial properties, among others. Each form contains a variety of fields to address important details. These include buyer and seller information, the legal description of the property, the price being offered, the deposit, the closing date, whether HST is applicable to the sale, and how long the offer will remain valid. The agent will specify what’s included with the sale and what isn’t — a full set of appliances may be part of the deal, while an heirloom chandelier may not be. They will also list any applicable rental items, like the water heater. The completed OREA form provides a basic framework for the offer.

From here, the agent creates their own “Schedule A” attachment, which is the “meat and potatoes” of the agreement. The Schedule A is drawn up at the agent’s discretion and relies on their professional expertise. Does the client want an inspection? Do they need financing approval? Should offers for condos be subject to status certificate review?

The Schedule A is where the agent can add an extra layer of protection for their buyer: a country home may require clauses that deal with water and septic; a house with a swimming pool may need different clauses at different times of the year, depending on whether the pool is shut down or operational when the property changes hands. An agent will rely on the MLS listing and their own observations for clues about what else to include.

The Schedule A should also establish clear expectations between buyers and sellers, to avoid unwelcome surprises. Clauses may address how many visits a buyer can have prior to closing, confirm that the seller will move out without damaging the house, verify that what’s included in the deal will be left in the home and in good working order, and lay out in writing that things attached to the house (such as plumbing, electrical, etc.) will stay in the home unless specifically excluded in a previous part of the deal. If there is a renovation in progress, there may be a clause that incorporates any unfinished work, so that both parties fully understand who is doing what, and who is paying for it. One of my favourite Schedule A inclusions is my expanded version of the “hidden defects” clause, which covers many aspects of the property and provides considerable buyer protection if the seller is trying to hide something.

PRO TIP: In reviewing thousands of offers, I often see agents who could protect their clients to a higher degree with just a few extra words. Most offers don’t need more conditions, but a very high percentage could provide additional protection within the Schedule A. Remember, if it’s not written into the agreement, it’s not understood. Handshakes and promises need to be in writing. #AskDavid #Advice