FSRA# 13047 Valko Financial Ltd.

Thinking about putting in a firm offer? Make sure you read this first.

The market is constantly changing these days, so if you asked me about affordability just a few weeks ago, I would have had a different answer, as the seller’s market has quickly shifted to a buyer’s market – for now, anyway.

The key difference is that the inventory of available houses on the market in the Kitchener-Waterloo area – and many other places across the province – has kicked into high gear.

This spring, many first-time homebuyers were quickly being priced out of the market due to multiple bidding scenarios that saw houses sell well over their asking prices. This was not an ideal situation for any buyer – let alone first-time buyers on a particularly tight budget.

And while affordability was going by the wayside just a few weeks ago, so too were having a condition of financing and a home inspection included in the purchase offer.

Weighing the no condition of financing risks 

Going in firm (with no conditions) on an offer to purchase is incredibly risky for numerous reasons.

In a state of panic during multiple bidding scenarios, many homebuyers opt to take the no conditions route in the hopes that it lands them the home of their dreams. What it often does instead, however, is land them in hot water. Once a firm offer has been accepted by the seller, the purchaser is bound to that contract, which means they can end up in a lot of legal trouble if they can’t secure financing on that property by the agreed upon closing date.

On the flip side, if a purchaser places a condition of financing within the purchase offer, they have time after the offer is accepted to arrange the mortgage. If they’re unable to arrange financing by a specific date noted in the contract, they can simply walk away from the deal with no repercussion.

Some Kitchener-Waterloo buyers are still willing to pay more than the asking price for homes, and sometimes the appraised values don’t line up. It’s important to note that lenders loan money based on appraised values, not on the selling price.


What happens if I forego a home inspection? 

When things go wrong with a house, they can prove extremely expensive – especially when pertaining to the home’s structural integrity. After all, a home inspection looks at much more than the mere cosmetics of a property that can be seen through an amateur’s eye.

Home inspectors are professionals who look at homes every day and know the ins and outs of pretty much anything that could go wrong with things such as the roof, foundation, electrical, plumbing and so much more.

And, on the financing side, foregoing an inspection can also prove risky. What you may not know is that lenders don’t only lend based on the borrower’s financial situation, but also based on the conditions of the property that you want to purchase. It’s part of a lender’s due diligence to ensure the property is livable and worth the amount of money that you’re willing to spend.

The safest move is to consult with a mortgage professional before making any offers to ensure your bases are covered and you’re not bound to a contract you simply can’t fulfill.  The Valko Team is always here to help you navigate today’s market, and find the best mortgage financing option for you.  Contact us today!

Join the Valko Financial Newsletter

Get updates on the housing market, economy, and learn valuable homeowner and finance tips!

Ready to get started?

Tracy and her team are here to help. Apply online or contact us today and allow us to help you along your journey in life. We will always provide sound financial advice on the best options for your mortgage.