Putting an offer in on a home is like a balancing act. Adding conditions and clauses can be a great way to protect you from ending up with a problematic house or failing to get financing. But first, you have to do a little digging into the current market to know what bargaining power you have as a buyer.
Reasons Why You May Want to Avoid Conditions and Clauses in Your Home Offer
If it’s a hectic seller’s market, you may have to go in with an unconditional offer for the seller to even consider you as a buyer. In other situations, you want to do everything you can to protect your own interests while still appealing to the seller.
In short, too few clauses means you’re not protected. Too many, and you run the risk of losing out on the home you want. How do you figure out the right mix?
Our team works with over a hundred sellers each year. We’ve had the privilege of being in the room after the buyer representative presents the offer and leaves. This gives us valuable insight into what the seller is thinking and how they may respond. So, depending on the market, here are some of the conditions and clauses you may want to avoid putting in your offer.
Planning a home sale soon? We have guides for all buyers! Whether you’re buying your first home or upgrading your family to your forever home. Discover all our buying guides right here.
Prohibitively Long Financing Conditions
The first step to understanding the fine balance of conditions versus no conditions is to understand the situation from the seller’s perspective. You want to protect your interests, and so do they. The reason sellers love unconditional offers is that they eliminate the risk of not closing. They no longer have to worry about their listing sitting in limbo while waiting to see if the buyer’s house will sell or if they can get financing. In the meantime, they are missing out on other potential buyers.
Adding a condition of financing protects you in case the bank doesn’t finalize your loan after all. However, you can’t leave the seller hanging for long. Imagine that the average period in your market is five business days. Asking for a 10-day financing condition is not just inconvenient for the seller, but it’s also a giant red flag.
They likely believe you won’t qualify for financing at all if you need that much time. You can eliminate the need for a long financing condition by getting pre-approved for your mortgage in the first place.
What type of house should you buy? The posts below can help you narrow it down to the best option:
- New Build Vs Resale Home: What’s Better in Today’s Market?
- 7 Things to Know Before You Buy a Condo
- 10 Things To Consider When Buying a Home
Offering a Lower Than Requested Deposit
Home buyers often think that a deposit and down payment are the same thing. They are similar, but you need to understand the subtle difference to be able to craft a compelling offer. The down payment is the total amount that you pay for a house while the mortgage covers the rest.
The deposit is the portion of that amount that you pay as soon as a seller accepts your offer. Your real estate agent can guide you as to what might be expected in the current market. Generally speaking, a higher deposit is desirable because it reduces the risk of not closing.
If you offer a low deposit, the seller might think you don’t have the funds to purchase the home. Normally in my market, we ask for a $5,000 to $20,000 dollar deposit. It’s even worse if you combine that with asking for a very long closing.
Clauses Already in the Pre-Printed Offer
Real estate paperwork is complex enough. Complicating things even further can be a turn-off for any seller. For example, you ask for a survey, but it’s already in the contract. Don’t make an already long document even longer by duplicating clauses and conditions. Keeping things as simple as possible shows the seller you are serious and informed.
Requesting Too Many Visits
It is reasonable to want to visit the home a couple of times before you take possession. You can take any measurements to see if your furniture will fit and what size curtains you will need. Plus, you can ensure the seller has not damaged the property and has made any agreed-upon repairs.
Asking for too many visits can feel excessive. Ten times is excessive! We’ve even had clients comment to us that “if the buyer is going to visit that often, I’m going to charge them rent.”
To learn more about the intricacies of buying a house, check out the informative posts below:
- What is the Importance of a Final Walk-Through?
- Should I Buy Or Sell First?
- Can You Buy or Sell a Home Using an App?
Asking for Too Many Inclusions
It’s one thing to ask for any window coverings and larger appliances to be left behind. But asking for everything from their dining room table and couch to the family cat can start to be offensive. This really is a fine line you don’t want to cross.
However, if there are some items that would make buying the house more appealing, talk to your real estate agent. These may be great negotiation points on a counter offer – as long as you remain reasonable. Only request the items that are most important to you. And once again, be sure to leave out anything already in the printed form.
As much as possible, work with your real estate agent to create an offer that is simple and clean. Taking the time to get it right gives you your best chance of securing the home you want while balancing your need to protect your interests.
Do you want more guidance when buying or selling real estate in Guelph or the Tri-Cities? Our local experts are happy to help. Reach out to info@gowylde.ca or call 519-826-7109 to take the next step.
