In our current market, with a limited inventory of properties available, I see many buyers often competing for the same home. In an effort to be seen as the most attractive offer, Realtors have been advising their clients their best bet is a clean offer, meaning no conditions to the deal that have to be met and signed off on by all parties prior to the deal firming up.
The most common conditions when buying a freehold home have traditionally been financing and home inspection conditions. A financing condition is easy to avoid if the buyer has obtained a mortgage pre-approval through a major bank. The buyer should have a written commitment from the bank that details the buyer’s total down payment as well as the maximum purchase price the buyer can afford. A home inspection condition can also be avoided if the buyer is willing to conduct a home inspection ($450-$800, depending on the size of the home, paid by the buyer) prior to submitting an offer. A buyer may choose this option if there are other offers on the table. Keep in mind, if you’re offer is not successful, you’re out the cost of the home inspection. And if you have to go through this process a few times, it can become costly. Home owners have been known to accept a lower price, firm offer (with no conditions) over a higher priced offer with conditions, just to know the sale is a firm deal.
Condo purchases were different…were being the keyword. As home buyers have been frustrated by offer dates and losing out on multiple offers, they’ve begun to look to town homes and condominiums as options. Even with no other conditions, condo offers usually include a condition for lawyer review of the Status Certificate (a legal document that outlines the financial health of the condominium and any potential liens against a specific unit). The Status Certificate was normally ordered after a conditional deal was accepted. The conditional period could take up to just over 2 weeks since management companies have up to 10 business days to provide the document.
As the condo market heats up, we are seeing offer dates and multiple offers on units in highly desirable buildings or neighbourhoods on a regular basis. As a result, the same theory has come into play – A clean offer will be viewed more positively by the vendor. This is something that was pretty much unheard of, yet has been seen more frequently over the last year.
The first reason for the shift is that many Listing Agents are advising their condo sellers to shell out the $100 to request a current copy of the condominium’s Status Certificate to make available to agents as soon as the listing hits the market. This way, the document can be reviewed prior to submitting an offer and no condition is required. Similar to how you can conduct a home inspection prior to submitting an offer.
The second reason for more firm condo offers is that Buyer Agents are simply advising their buyers ‘not to worry’ about the status certificate and to proceed with a firm offer if they want to secure the home. Good advice…bad advice? It’s not a document that’s to be taken lightly, so I believe it deserves some attention, but that’s for you to discuss and decide with your Agent.
What is certain is that now more than ever, an experienced and knowledgeable Realtor can help navigate you through the ins and outs of this quickly evolving real estate market.