Updated 2024
The real estate market can seem complex and overwhelming for first-time home buyers. Browsing online listings is fun as you imagine endless possibilities for your future, each scenario more exciting than the last. The practical aspects can be a little more perplexing. For example, what are the normal conditions and clauses to put in your offer?
Even if you’ve bought a home before, it always helps to review the process. So let’s run through this. Imagine you’ve found the right home and you’re ready to make an offer. Should you add conditions or submit a firm offer? A review of the clauses and conditions below can help you decide.
Condition of Financing
Ensuring that you will have access to sufficient financing is critical. Buying a house is a legal agreement, and there can be serious implications if you have to pull out after submitting your offer. There’s a good chance you’d lose your deposit, for one thing. Backing out also opens the doors for the seller to sue you for any loss they may incur if they end up selling the house for less later.
Getting a pre-approval is a great way to find out how much a lender is willing to authorize. Still, you could find yourself facing a financial gap if the bank appraises the house for less than what you offered. To protect yourself from any uncertainty, you could include a condition of financing in your offer. Not that you want your financing to fall through, but at least you won’t face the worst repercussions.
Understanding the current market will help you get the right house at the best terms. Learn more in the posts below:
- Will Any of These Government Ideas Help With Guelph’s Housing Shortage?
- From Buyers to Sellers: The Intricate Dance of Inflation, Interest Rates, and Real Estate
- How to Ignore Bad Real Estate Advice Without Losing Friends
Condition of Home Inspection
A house might look well-built and structurally sound, but how can you really be sure? Most buyers – especially first-time buyers – can’t tell if there are any severe defects with a property. That said, this is the biggest purchase you’ll have made thus far in your life. You’lll want to make sure you’ve made a good investment and that you will not be surprised with huge repairs down the road.
Placing a condition of home inspection gives you the opportunity to withdraw from the purchase if anything is seriously wrong. Once the inspector gives the green light, the transaction will proceed.
Condition of Sale of Home
This is not a condition first time buyers would include. However, if you’ve been in your existing home for a long time, you may be depending on the proceeds from your sale to finance your next purchase.
But what happens if you place an offer only to find your home doesn’t sell or spends too much time on the market? Placing a condition of sale of your existing home will give you an out if you cannot find a buyer in time.
Other Conditions and Considerations
The above are the three most common conditions buyers will include in their offers, but you aren’t limited as to what you can request. For example, you might want the right to walk through the home a few times before closing date to ensure no damage has occurred since you last saw it. Or you may want those new stainless steel appliances or gorgeous new drapes included with your purchase.
Nearly everything you want could be included as a condition of your offer. However, just because you can impose a condition doesn’t always mean you should.
How can you make sure a house is right for you? The resources below will help you do your background research:
- 10 Things To Consider When Buying a Home
- What is the Importance of a Final Walk-Through?
- New Build Vs Resale Home: What’s Better in Today’s Market?
Evaluate the Market
Before placing an offer with numerous conditions, consider whether or not the market is in your favour. Sellers almost always prefer a firm offer (one with no conditions) whenever possible because it eliminates the chances of their sale falling through.
If you place a conditional offer in a busy market where you’re competing with other buyers, you might miss out on the home you love. Your real estate agent can help you understand how much negotiating power you have and create an offer with a high chance of being accepted.
The trick is to be compelling enough without paying more than you have to. This requires deep insight into the current market as well as a great deal of negotiating skill. Working with an experienced real estate team is critical to securing your dream home at the best price and terms.
Are you on the hunt for the right home in Guelph or the Tri-Cities? Our Guelph real estate agents are here to support you with anything you need. Contact us today at info@gowylde.ca or call 519-826-7109 with any questions.
