Subject Free Offers – Are They a Good Idea?

This is a question I’ve been asked a lot lately as the market heats up, multiple offers are common, homes go over asking price, and buyers become discouraged.

The short answer: don’t do it!

The long answer : You can be pre-approved – be an A+ client with excellent qualifications, great credit, established career and solid downpayment, BUT the property itself may be the issue. You cannot give 100% assurance of financing without the specific property details.

Issues that may come up in an appraisal that would provide challenges to financing:
Asbestos
Former Grow-Ops, even remediated ones
Remediated Drug Labs
Leased land
Zoning – for example – commercial/residential, resort
House size too small
Land value is significantly more than the dwelling value
Lead plumbing

If you are purchasing a Strata property, the strata docs themselves may have red flags for lenders that may provide challenges to financing:
Contingency fund too small
Mandatory rental pools
Deprecation report
Self-managed strata
Upcoming Special Assessments/Levies

Another problem we see arise is the ability to obtain fire/home insurance. This is a mandatory condition for all mortgages and there can be instances that make this tricky, such as:
Fire season, often if there is an active fire within 25 km of your home, you cannot obtain insurance
Flooding/natural disasters which can also impede the ability to obtain home insurance in your area
60-amp electrical service, you may be required to upgrade before you can get home insurance
Oil tank buried on the property, it may be causing environmental problems and need to be removed

These are just a few issues that may arise, the short answer is write in subject to financing, and work with an experienced realtor who can help present the offer in the most favourable light.

Nicole Crichton