How the offer process works

The Agreement of Purchase and Sale

When you make an offer on a home in Canada, you're signing an Agreement of Purchase and Sale (APS). This is a legally binding contract. It includes the purchase price, the deposit amount and when it's due, the closing date, any conditions you want included, and a list of what's included or excluded from the sale (appliances, fixtures, etc.). Your real estate agent prepares the APS, but your lawyer is the one who reviews it in detail and handles the legal aspects of the transaction. RECO explains your rights as a buyer in Ontario, including what you should expect from the agents involved in your transaction.

Once both parties sign and any conditions are satisfied, you have a firm deal. Walking away from a firm deal means forfeiting your deposit and potentially facing a lawsuit. This is why conditions matter so much — they're your legal exit if something goes wrong.

Conditions that protect you

A condition is a clause in your offer that allows you to back out of the deal if a specific requirement isn't met. The most common conditions are:

Financing condition. This gives you time — usually 5 business days — to confirm your mortgage is approved for this specific property. Even with a solid pre-approval, lenders still need to approve the property itself. If the home appraises below your purchase price, you may not get the full amount. A financing condition lets you walk away if that happens.

Home inspection condition. This gives you the right to have a licensed home inspector examine the property and report on its condition. If the inspection reveals serious problems, you can request repairs, ask for a price reduction, or back out of the deal entirely. You typically have 5–10 business days to complete this.

Status certificate condition (condos only). The status certificate is a package of documents about the condo corporation's financial health, any ongoing lawsuits, special assessments, and the reserve fund. Your lawyer needs to review it. A weak reserve fund or pending litigation are legitimate reasons to walk away.

The deposit

The deposit is a good-faith payment that accompanies your offer. In most Ontario markets it's 5% of the purchase price, though it varies. The deposit is typically due within 24 hours of acceptance, paid by certified cheque or bank draft to the seller's brokerage. It's held in trust until closing, then applied to the purchase price.

If you back out during the conditional period (before satisfying or waiving conditions), you get your deposit back in full. If you walk away from a firm deal — after conditions have been waived — you forfeit the deposit. The seller may also pursue you for additional damages if they can't resell at the same price.

Multiple offer situations

When a property attracts multiple offers, the seller's agent sets an offer presentation time, and all buyers submit their best offer simultaneously. You're bidding blind — you don't know what other buyers are offering. Your agent will help you read the market and decide on a number that's competitive without being reckless. In multiple offer situations, sellers often favour clean offers: fewer conditions, larger deposits, flexible closing dates. Escalation clauses (automatic price increases above competing offers up to a ceiling) are used in some cases — discuss this strategy with your agent.

Bully offers

A bully offer (also called a pre-emptive offer) is submitted before the seller's scheduled offer night. A seller lists a property, announces they'll review offers on a specific date — and a buyer submits a strong offer before that date to knock out the competition. Bully offers are usually significantly over asking with few or no conditions, designed to be hard to refuse. If you're in a situation where you want to submit a bully offer, move fast — sellers must notify other interested buyers and give them time to respond, but the window is short.

After acceptance: what happens next