Website design By BotEap.comIsn’t it frustrating to call an agent about a home only to be told “Sorry, home is being sold conditionally” but it still shows up on Realtor.ca? Ever wonder why some conditionally sold homes are still available to view but others are not? I will try to explain it here.

Website design By BotEap.comWhen buyers bid on a home, they generally have strings attached to their offer. Some of the common conditions are Financing, Rare is the offer that is truly “Firm”. I’ve only seen a few. Home inspection, home insurance, attorney approval, and sale of buyer’s property.

Website design By BotEap.comHere is the explanation of what each condition means and the normal deadlines for each one.

Website design By BotEap.com1. Conditional on Financing. The home buyer does not pay cash for the property and must arrange a mortgage with a lender, be it a bank, a credit union, or a legendary rich uncle. It takes time for the lender to make a decision based both on the buyer’s creditworthiness and ability to pay and on the property itself. Some lenders can do this relatively quickly and others take longer. Banks usually take longer than rich uncle. Generally times do not exceed 10 days.

Website design By BotEap.com2. Conditional on the home inspection. The buyer hires a self-employed home inspector (approximately $ 400) to inspect the home. Again, generally no more than 10 days.

Website design By BotEap.com3. Conditional on home insurance. Home insurance costs can vary widely with different companies. Get an insurance price that is acceptable to you. 10 days

Website design By BotEap.com4. Conditional on the approval of an attorney. It is not as common as the other conditions. Same time.

Website design By BotEap.com5. Conditional on the sale of the buyer’s property. This is the clause that home sellers really don’t want to see in an offer. It means that buyers have not sold their current home and have to sell it before they can buy another. The time frame for the condition can be anything, but is generally no more than 60 days.

Website design By BotEap.comThe escape clause

Website design By BotEap.comThere may be what is known as an escape clause in an offer. The escape clause is inserted when the time period for conditions is longer than the home seller wants but is still willing to accept. If there is no escape clause in an offer, the house is practically off the market during the time period of the conditions. The escape clause means that the seller can look at other offers and the person with the original offer has a set deadline to remove the conditions or leave the house. The most common case of using an escape clause is when the buyer has a condition of sale of the buyer’s property within the offer, although it can be used in any case with a condition. Sellers will generally accept a week or even up to two weeks for a buyer to arrange financing and an inspection, but will be reluctant to wait 2 months for a buyer to sell their home, so escape clauses are generally only used for the sale of the buyer’s property conditions.

Website design By BotEap.comHomes with offers with any condition can still be shown to potential buyers, but without an escape clause in the existing offer, what’s the point? Most brokerages stop listing once a home is sold on the condition of financing and inspection. Only once it is sold firm (all conditions have been waived) does the property leave Realtor.ca.

Website design By BotEap.comRemember, an escape clause is the key factor in whether you will see that house being sold conditionally.