Ah, abbreviations. Who doesn’t love them, especially as we get older and more terms with multiple words get crammed into a group of letters that we frantically have to Google? Real estate is full of them. One that you might encounter frequently is APS, as in, should you ever sign one, and what critical clauses should you include? But let’s back up a moment. First question: What does APS stand for in real estate? 

An APS is an Agreement of Purchase and Sale, otherwise known as an offer. It sounds straightforward. However, this is a critical and legally binding document that you should clearly understand, whether you’re the one buying or selling a home. In this post, we’ll talk about what you need to know about an Ontario Agreement of Purchase and Sale. 

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The Home Buying Process Simplified

When you’re not the one in the middle of it, a real estate transaction can seem quite simple. A buyer sees a house, loves it, and sends over their offer (also known as an APS) along with any conditions of the sale. 

If the seller accepts, it’s a done deal and the house is sold. However, reality is usually a lot more nuanced and complex, and a home offer tends to come with a long list of terms and conditions. Unlike blindly checking off permission on a website, you really should read and understand this contract. 

A house is a significant investment, especially in Toronto. You want to be sure of what you are getting and be fully aware of your obligations and rights. Plus, an APS is legally binding. If you sign it without understanding it, you’re still responsible for your end of the agreement. 

Are you looking for even more home-buying tips for Midtown Toronto? You’ll find plenty in the posts below:

What Is in an APS?

In real estate geek speak, an Agreement of Purchase and Sale is also known as OREA Form 100, which is the official paperwork for a Realtor®. The process is far more involved than simply checking “yes” or “no.” 

Certain principles need to be true before any real estate contract can be considered valid. 

  • Both parties must have the legal capacity to enter into a legal agreement. They need to be of legal age, of sound mind, not under duress, and have the power to authorize the sale or purchase. 
  • A valid home offer is always in writing. Verbal or handshake agreements are not enforceable. 
  • All essential elements of the offer must be clear, including the property description, purchase price, amount of the deposit, inclusions and exclusions, closing date, irrevocable date, and conditional period.
  • The homeowner chooses whether to accept or decline an offer based the exact written terms. If the seller makes any changes, it’s now a counter-offer and the APS is sent back, and ball is in the buyer’s court.

Signatures from both the seller and the buyer on the offer officially make it a legally binding Agreement of Purchase and Sale. We are now past the point of no return unless there are conditions that are unmet.

Navigating the Market

While the legal principles of an APS always hold true, some terms will depend heavily on the Toronto real estate market. For example, consider whether or not a buyer should include conditions. 

Contingencies like passing a home inspection, the condition of obtaining financing or to sell an existing home within a certain timeframe protect the buyer. Adding them makes sense if you have an edge in the market.

Be careful though, because too many conditions make the offer less appealing to a seller. Think of the position they’re in. There’s always a risk that a conditional offer can fall through.

This uncertainty makes it difficult for the seller to plan their next steps. If they receive one offer that’s firm and another that’s conditional, chances are, they will pick the sure thing. 

Knowing where you stand enables you to negotiate the most favourable terms and price. Working with an experienced real estate team is the best way to ensure you get a fair deal in the current market. 

Is selling your current home an essential part of your future plans? The posts below can help you hit the ground running:

Why Representation Is Critical 

Buying or selling a house is never a decision anyone takes lightly. The market is also constantly evolving, and no two transactions are ever the same. 

Though there is no obligation to work with a real estate agent, it is highly advisable to have representation before signing an Agreement of Purchase and Sale. This is especially true when you have been out of the market for some time. Moving can be highly emotional for everyone. To get the best results, it always helps to have an expert around who remains objective and unbiased.

Do you have more questions about either the buying or selling process? Our Midtown Toronto real estate agents are here for you. Reach out to us at david@batorigroup.com, bobby@batorigroup.com or call (416) 485-7575 to start a conversation.