BC Sunshine Coast real estate by Menno at Royal lePage Real estate on the BC Sunshine Coast

Every real estate deal we process at our office is a little bit different, of course. Still, there is a procedural framework that we try to adhere to. The major “standard” steps in the selling process run from “offer” to “conditional sale” to “firm” to “closed”.

Although the steps in real estate transactions are standardised, there are things out of the ordinary in most every deal. Hardly ever is it simple and straightforward.

It all sounds simple enough in real estate but LOOK OUT for many things that can still go wrong, once the ink on the contract has dried. Sales of properties happen all the time so the process is quite streamlined. At the same time, every transaction is unique and will have its peculiarities.

To get a property “sold”, we first must list it and offer it on the market or otherwise inform prospective buyers that it’s available for sale. An interested party will view the property and if they like it enough (and can afford it) then they may ask their agent to draft “an offer”, the first step in the negotiation process to come to an agreement of purchase and sale.

In Real Estate, there are several steps in the sales process and they are all sometimes referred to as “SOLD”. That, in itself, could create a few misunderstandings. Therefore, it might be quite prudent to be a little bit more specific. What “sold” do you mean, precisely? There are various “sold” steps in the selling process. Here are the most important ones and the various names they go by.

When the machine spits out the first contract pages, the deal may not be done yet. You could be in for a string of counter offers or even a "rejection".

WHEN A PROPERTY IS NOT “SOLD”

Many people think that when there’s an offer on a house, that it’s actually as good as sold. That’s not entirely true. For as long as a property is under offer (or counter offer), it’s not sold. Only when the offer (or the counter offer) is actually accepted in writing, there would be a “conditional sale”. Please note the “in writing” because it doesn’t count when it’s a verbal agreement; not in real estate.

One thing about an “offer” is that it can be retracted at any time before the other party accepts it. Therefore, as exciting as it might be to hold “an offer” in your hand, it doesn’t mean that the deal is done.

The sequence of moving from “offer” to “accepted offer” can be quite a challenge. This is because the buyer and the seller have opposite interests. Usually, one of the two (or both) will have to give.

Although holding a conditional offer is pleasant, you might still find it stressful, particularly because you don't quite now what's going on with the other contract party.

A CONDITIONAL OFFER, WHAT IS THAT?

When an offer has been “accepted”, we have entered the conditional sale phase, sometimes referred to as a pending sale. Certain conditions still need to be fulfilled as the buyer’s “due diligence”. The conditional sale phase may take anywhere from a few days to several weeks.

The term “Pending” (from Latin: means hanging) is used to indicate the selling status of a property that is under agreement with certain conditions still to be met. The most usual condition is that of financing. Other frequently occurring conditions are: inspection, appraisal, survey, review of documents and insurance eligibility. There are many other conditions possible. A buyer gets a certain (specified) amount of time to fulfill the clauses.

When the deal goes “firm”, everybody can start to pack their stuff and get ready for moving day. Things usually don’t go wrong at this point.

A firm deal is much better, you can basically take it to the bank. Still, there's nothing quite like a deal that's all closed - only then will the transaction be totally done.

A FIRM DEAL, WHAT IS THAT?

Once the sale firms up, it becomes unconditional. The deal is now “firm and binding” while both parties are waiting for the closing date. The sales information is then transmitted to the Real Estate Board and the property is marked as SOLD. Although this appears to be true from a legal point of view, the title to the property hasn’t changed hands. Some people hesitate to call a property fully sold at this point.

This is because, very rarely, such a firm sale may fall. This can happen if the buyer or the seller were to change their minds. Typically, this scenario will be referred to as a breach of contract, leading to lawsuits, forfeiture of deposits and some genuinely unhappy faces. A fallen “firm” sale, being quite rare, stirs up a lot of emotions because both buyers and sellers tend to depend and rely on the power of a contract. In the case of a fallen sale, it is common for the property to go back on the market. This is why some buyers or sellers go as far as to not consider a property completely sold until the actual closing day. Technically, it is therefore still possible to view a property and even to make an offer on a property that is already sold but not closed. Obviously, such a viewing or (or even: offer) is extremely rare.

Let's just assume that a closed deal actually usually means that the deal is all done. It's quite rare that something in a closed deal will act up later.

CLOSED, DOES THAT MEAN THE END OF IT?

Once a transaction CLOSES, the deal is actually done. Nobody can deny any longer that the transaction has taken place because it’s a historical fact. The seller got paid and the buyer got the keys (title to the property against closing monies). This part of the transaction is normally done at the notary public/lawyer’s office.

Even though the transaction has closed and the title has gone to the new owner, this sometimes isn’t the end of it entirely. For instance, the buyer and seller may still need to adjust certain items after closing (thinking about the property tax adjustment, for instance, that might turn out differently).

It is also possible that the buyer finds something that they feel was misrepresented to them such as a defect to the property. In that case, there might be legal consequences. If you ever find yourself in such a situation, it might be time to call the lawyer. Hopefully you’ll never experience that.

Real estate is actually a legal topic - that's also why real estate deals are usually closed at a lawyer's office. Below are some other real estate legal topics.

MORE LEGALITIES surrounding real estate are highlighted in the following blog articles:

Serious mortgage problems here: http://www.mennorealty.ca/Blog.php/off-the-rails

Staged homes are better? http://www.mennorealty.ca/Blog.php/beware-of-staged-homes

The ever-changing real estate market: http://www.menno.ca/?p=19508

Saying “no” to a real estate offer: http://www.mennorealty.ca/Blog.php/thanks-no-thanks

When a real estate deal is a true bargain: http://www.mennorealty.ca/Blog.php/tremendous-bargain