No Conditions in Hot Market?

madonthemike wrote: ↑ A friend of mine was checking out a place, the next day he was advised by seller that they had received 7 preemptive offers and the offer viewing was changed and brought forward, does this mean that 7 people were willing to put in offers with no conditions at all? Just wanted to know from buyers/buying agents what the current trends are? And does preemptive mean before offer date with no conditions or can it have conditions?

With financing and home inspection being the two most common conditions, how are these people able to not include these (esp. since it was in this case an older home)?

For financing , I would assume that they have the whole amount or have extra in case bank appraisal comes in lower.
For home inspection, do ppl do a pre-inspection? What if you don't end up getting the place?

I just find it hard to believe all 7 had both sorted. Things seem to be much diff than when i bought a few years back, or maybe it was always like this in a hot market?

toyopl wrote: ↑ My family sold their house in Milton in Sep, they got 10 offers ranging from $775-$840k.
7 of those offers were no condition, ranging from $10-25k downpayment.
It was a newer house though, 6 years old.

CNeufeld wrote: ↑ It's pretty common in hot markets that offers are presented with no conditions. The buyer needs to be confident in their ability to secure funding, and they'd want to have enough money set aside to handle any foreseeable repairs/renovations required. Either that, or be able to "inspect" the house carefully enough (and have enough personal knowledge) to make a solid decision on any repairs required.

C

madonthemike wrote: ↑ Interesting, just seems risky if you are dependant on the bank for majority of the funding. Bank provides a pre-approval based on info you gave them, they dont know which property you will end up buying. Unless there are diff types of pre-approvals?

As for inspection, a lot of us could probably assess general items like roof condition, windows etc.. but things like structural stuff, foundation issues etc. those are not that straightforward.

madonthemike wrote: ↑ Interesting, were these all above asking - what was the listed price?

madonthemike wrote: ↑ As for inspection, a lot of us could probably assess general items like roof condition, windows etc.. but things like structural stuff, foundation issues etc. those are not that straightforward.

CNeufeld wrote: ↑ You can get a pre-approval for your personal financial situation, based on your income, debts, etc. That would let you know how much the lender would approve on any given property.

When it comes to how much they would lend on a specific property, that's where you get into appraised value of the house. If they do an appraisal and it comes back lower than your agreed purchase price, you would have the option of putting more money down to bring the mortgage amount down to an acceptable number to them.

For example... Based on your financial situation, the lender says you can afford a $1M home, with a $200k down payment, so the total mortgage is $800,000. You find a property, and end up purchasing it for $1M. You take that back to your lender, they do an appraisal, and it comes back and says that the property is only worth $900,000, which means the most they'll lend on the property (assuming the 20% down is a fixed percentage) is $720,000. That means you, as the purchaser, need to come up with a $280,000 down payment now (1,000k - 720k = 280k). Not a killer difference for some people, but dangerous if you don't have the assets.

With the inspection, I don't disagree with you. So the solution is having enough cash/resources that you can put in a significant renovation, if required. You don't want to expend all your liquid assets on the down payment and closing costs, only to find out you've got black mold in the house and no money to address the situation.

Nothing is stopping someone from putting in an offer with conditions. But given multiple offers (over asking) with no conditions, your conditional offer is going to need to be very strong in some other way to make up for that. Either that, or you need to look in a "not-so-hot" market, or look at spending less on a property so you have more cash available for contingencies.

You would also need to keep in mind that if you're unable to close on the house after putting in an unconditional offer, you're not just risking your deposit. You risk being sued for any seller losses, including the seller having to turn around and resell for less than you offered. So it's not something to take lightly.

C