Are you preparing to buy a home? When you find the right property and decide to put an offer in, there are a few things you should know. First off, along with the dollar amount you include, there are other elements you’ll want to consider—including conditions. When added to a real estate contract, they can protect you from worst-case scenarios. But does that mean you should always include them in your offer?
If you’re preparing to buy a home, here’s what you should know about home-buying conditions…
What are home-buying conditions?
Home-buying conditions are stipulations that must be fulfilled in order for a purchase to move forward. They allow buyers to back out of a real estate deal under certain circumstances.
For example, a financing condition would allow you to walk away from your purchase consequence-free if your financing falls through. Likewise, an inspection condition makes it possible for you to move on if an inspector’s report is unsatisfactory. Without these stipulations, the seller may be able to keep your deposit should the worst happen.
Of course, these are only two common examples. There are a variety of other conditions that you could add to your offer to protect yourself when you make an offer.
Is there any reason not to include them?
Adding conditions to your offer may sound like a foolproof way to prevent unpleasant surprises. Needless to say, there’s a catch. As a rule, sellers don’t like them. They prefer the easiest and most efficient road to the finish line, and that doesn’t include conditions that need to be fulfilled.
If you’re in a competitive buying situation, the inclusion of home-buying conditions could put you at a disadvantage. While most sellers will go for the highest offer, there are factors that could tip the scales in a particular buyer’s favour if the dollar amounts are close. For example, if you’re neck-in-neck with another purchaser and they make a “clean” offer (one that isn’t subject to conditions), they may win out.
Is there a safe way to waive your conditions?
If you find yourself in a multiple-offer scenario and want to come out on top, you may want to focus on making your offer as appealing as possible. Depending on the circumstances, that may mean removing all conditions.
Before you take this step, you’ll want to weigh all the pros and cons with your real estate agent. Discuss your concerns, and see if there are any steps you can take to make waiving conditions safer.
For example, if you choose a home that you can comfortably afford, obtain pre-approval for it, and ensure that you have a financial buffer in case you need it, removing a financing condition may not be so scary. And if a seller is offering a pre-listing inspection (some do, to learn what could be wrong with their home before they list), you may want to rely on it instead of insisting on setting up your own.
It’s all a matter of your comfort level, so ask your agent any questions you may have. Make sure you’re fully confident in your offer—and don’t take any steps your uncomfortable with!
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