There are several common conditions that normally accompany an offer to purchase real estate. In a busy market it can be tempting to have a few conditions or none at all in order to beat out the competing offers.
It can be a risky situation but the reward is getting your dream home.
Here are some the of risks associated with omitting each condition.
Strata Documents: For strata titled properties we normally ask for two years worth of strata documents to review. These include strata minutes, AGMs and SGM minutes, form b, strata plan, and a few others. Luckily in a busy market this can often be done before the offer deadline. Omitting this condition without reading the strata documents can result in unexpected pitfalls. There could be potential levies for future building repairs that were easily discoverable in the documents. It can also result in the discovery that the strata lot is smaller than was advertised on mls. Strata insurance deductibles are also very important to know.
Financing: Omitting financing condition is one of the riskier ones, especially if your down payment is less than 20%. Being fully pre-qualified by your lender can alleviate some, but not all of the risk. If the appraisal comes in lower that what you offered for the property you could be left scrambling to find enough money to cover the gap between the appraised value and the offer amount. If you are unable to complete the purchase once the offer is unconditional you have a very good chance of forfeiting your deposit to the Seller and could be at risk for covering damages to the seller.
Home inspections: This is also a big one. Forgoing a home inspection could result in large repairs bills. For example, in Victoria the occasional older home has a buried underground oil tank. Removal and remediation of an underground oil tank can be costly. That is just one of many examples of things to look out for. In a busy market one can be strategic and have a home inspection done before the offer deadline.
Title: Title review is best left to your lawyer. Realtors are very familiar with title documents, but title charges are written by lawyers for lawyers. Some of the charges on a title are very old and need further research by a legal professional.
Insurance: You may find out after you have an unconditional offer on your new home that it is not insurable or will need some repairs (like oil tank removal) before the home can be insured. This can also cause hiccups for final mortgage funding.
Property disclosure statement: If certain boxes are ticked on the disclosure statement your bank will not fund your mortgage on the completion date. This would likely result in loss of deposit and potential seller damages. Disclosures are provided ahead of time and can be reviewed prior to writing an offer.
This article is for entertainment purposes and should not be deemed as advice or agency representation. Please contact your Realtor for more info.