During the red-hot Canadian real estate market spurred by the pandemic where bidding wars were pretty much expected, it was virtually impossible to get an Offer to Purchase accepted that contained important conditions to protect the buyer when making among the largest purchase of their lifetime.
Fortunately, conditions have normalized over the past year as interest rates and inflation have continued to rise. Following are some important conditions you should always consider when completing your Offer to Purchase.
Condition of financing
This condition buys important time to ensure your mortgage financing will be approved for a specific real estate property. Having your mortgage agent secure a mortgage preapproval is a good place to start when house-hunting, but it isn’t a guarantee of secured financing. You need to receive confirmation from your mortgage agent that you’re approved for the necessary funds based on the house for which you plan to make an offer.
Home inspection condition
This condition allows you to set time aside for a professional home inspector to evaluate the property, both inside and out, and determine whether there are any areas of concern. You’ll receive a written report and it’s up to you to determine whether any possible issues identified would prevent you from buying the home.
Sale of existing property condition
If you’re an existing homeowner, you may also want to include a condition that the purchase of your new home is dependent on the sale of your current home, especially if you’re using the money from one property to buy another. There may also be an option to bridge the gap between closing dates, so be sure to ask your mortgage agent about this strategy as well.
Real estate transactions involve many moving parts and substantial sums of money, so it’s vital that you protect your interests. While the thought of having to walk away from your dream home may be disheartening, the possible repercussions of excluding conditions in your contract could be much worse. There have been some cases where buyers have been sued for hundreds of thousands of dollars so, while potentially cumbersome to the seller, conditions are an essential component of responsible homebuying and financial peace of mind.
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