[Blog] Common Conditions to Include or Drop in Your Offer
Throughout 2021 and the early part of this year, buyers were placing offers on homes with minimal or no conditions due to the high demand and historically low inventory seen across Canada. The market has shifted more in recent months and with inventory on the rise, buyers now have more negotiating power and the opportunity to include conditions in offers. Conditions can, however, come at a price. Some can make an offer less appealing and may give sellers reason to look at other offers. Ensuring you include the right conditions for the type of home you’re interested in could be the difference between your offer being accepted or declined. It’s equally important to choose the right conditions to protect yourself as a home buyer as well. Here are the most common conditions that the experts at Zoocasa suggest to include or drop.
Common Conditions to Include in Your Offer
This simply means that if you are the buyer, the offer will be conditional on the sale of your current home. This condition of course is only applicable if the buyer currently owns a property that they are planning to sell. If you’re concerned you won’t be able to sell your home it may be worth including this. Usually this will also come with a stipulation that says if the sellers receive another offer, you have a specified period of time to either sell your home or drop this condition entirely, otherwise the sellers can void the agreement and move on with the new buyer.
A financing condition will ensure that your offer is only valid as long as you are able to secure approval for the mortgage needed to purchase the home. If your mortgage application was rejected or if your appraisal comes in too low, this condition would protect you and make the offer void. While sellers love offers that are free of conditions, this is one of the most common conditions because leaving it out could lead to losing your deposit as well as potential legal penalties. Not including this may be something you want to consider in a more volatile market or if you’ve already secured a pre-approval, but do so at your own risk.
A home inspection condition allows the prospective buyers to hire a professional (at their own expense) to review the home’s plumbing, electrical, and more prior to firming up the offer. If concerns arise during the inspection, the buyers can ask the sellers to fix any of the issues spotted, change the selling price to accommodate the work that will need to be done, or void the offer altogether. Doing an inspection is a good way to confirm the house you’re buying is in good condition, and the money spent is a small investment that can save you big time in the long run.
Wear and tear is normal in every lived-in home. Repairs to drywall, loose floorboards, carpet and even fences are all normal to include as a condition in your offer. You can make the offer conditional on the seller making any repairs by a certain date, or by closing. You can also include an amount that would cover the costs of the repairs if the seller is not able to fulfill this condition. The seller will only receive this money if the repairs are completed by the agreed upon date, but the buyer will retain the money if they aren’t.
An escape clause is a condition the seller often includes in an offer. They allow one of the parties involved in the transaction to back out of the deal and can only be triggered by specific circumstances. For example, if you’ve made an offer on a house and there is an escape clause, a third party can make an offer on the same property. If the seller wants to accept, you are given a specific amount of time to complete your buyer conditions and/or the transaction. If you’re able to firm up your deal in the agreed upon period of time, then the seller cannot accept the other offer, however if you fail to do so then the seller can move forward with the competing offer.
Common Conditions to Drop From Your Offer
Buyers often want to re-visit the home prior to closing and with this common condition, they usually arrange to visit the property another 1-2 times before closing, with 24 hour notice. This is normally done to decide on things like furniture, paint colours or any renovations you wish to plan in the future. It’s an opportunity to make sure the house is also in the same condition it was the last time you viewed it, that all appliances are in good working order or, if you’ve requested repairs as another condition, make sure they have been completed. You can choose to drop this to make the offer more appealing, but you should of course be wary of any damage that happens after your initial viewing.
The title of a home is its legal record, which includes a history of who has owned the home, as well as any information on claims or judgements on the property that may need to be paid before the transaction can be completed. A lawyer would be able to deal with any problems that come from this on your behalf, but if they prove to be insurmountable then the inclusion of this condition will allow you to walk away unscathed. If you’re confident in the history of the home then removing this condition may make your offer more appealing to sellers.
Fixtures include everything from ceiling lights, to drapes or curtains that slide off a rod and bathroom mirrors. A buyer would include this condition if they were interested in any of the removable items that they see in a home. But, if the sellers received the bathroom mirror as a wedding present or wanted to take the antique chandelier to their new home, removing this condition can make the offer for favourable for the sellers.
The conditions you choose to include in your offer may vary depending on the activity and interest a home has received, what type of property it is and whether the market is favouring buyers or sellers. Zoocasa has qualified real estate agents across Canada that can help you navigate your local market and negotiate to get you the home of your dreams. Download the free buyer’s guide today to get you started.