The return of the conditional offer

We👏🏻 stan 👏🏻 financing 👏🏻 conditions 👏🏻

These days, firm offers are as common as ridiculous gas prices. The hot housing market has made it seem almost impossible to add conditions to an offer. If you aren’t willing to place a firm offer, there are A LOT of people that are.

That said, there has been an obvious shift in the market. Houses are taking a bit longer to sell and when they do, they are selling for closer to asking price. Interest rates are way up as are gas prices and costs at the grocery stores. Life in general is more expensive and it's making people more cautious (rightly so).

We’re never going to be the ones telling you to “go firm”. For starters, we could lose our license but from a financing perspective it can be risky and here’s why:

👉 Just because you’re pre approved as a buyer, doesn’t mean the property is. If there are issues with a property only discovered after an offer is accepted, a lender doesn’t have to lend on it. You might be faced with limited lender options which may force you to pay additional costs or fees.

👉 Appraisals are starting to come in “light”. The market has turned. Prices seem to be levelling and houses are taking longer to sell in some cases. If the property doesn’t appraise for what you paid, a lender will only lend on the appraised value. You as the buyer will have to come up with the difference (however much that is). And if you’re considering a loan to make up the difference, don’t. Taking on more debt will affect your overall ability to qualify.

👉 Are you willing to walk away from your deposit money? If you place a firm offer and issues arise and you can’t find a lender and you can’t close you are in breech of the sales contract which means if you walk away you are likely giving up your deposit money. In some cases that can be as much as $20,000 or $50,000, or even more!

Ultimately the decision to place a firm offer is up to each individual but if you’re asking for our opinion, we’re always going to vote for playing it safe and adding a financing condition.

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