Real Estate

[Ontario] How does condition on financing affect competitiveness of an offer ?

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  • Jul 4th, 2020 10:48 pm
[OP]
Newbie
Oct 6, 2010
19 posts
3 upvotes
toronto

[Ontario] How does condition on financing affect competitiveness of an offer ?

Putting an offer tomorrow, quite a premium on ask, with a hefty amount deposit, but with condition on financing, how bad does that look compared to other offers in the eye of the seller?
10 replies
Deal Addict
Sep 2, 2009
2396 posts
2421 upvotes
Ottawa
randomnick wrote: Putting an offer tomorrow, quite a premium on ask, with a hefty amount deposit, but with condition on financing, how bad does that look compared to other offers in the eye of the seller?
"Competitive" meaning you expect to be competing against other offers? The premium would have to be pretty decent above other offers without the condition. (The premium would depend on the price as well. 20k on 500k? 50k on 1M? I'd probably go with a clean offer unless I had really good evidence the condition is a formality.)

If other offers had no conditions, I probably wouldn't even take your deposit amount into consideration unless it was basically a down payment a bank would require - maybe not even then. Why? Because you could basically get the whole thing back if you don't get financing. And if you have such a hefty deposit, I would also wonder why the financing condition is even needed compared to another offer without it.

You pre-inspected / no inspection condition?

Closing date, time to get financing... Also considerations.
Deal Addict
Sep 4, 2006
1296 posts
1022 upvotes
Ottawa
I sold my home last month. Three offers over ask. I went with the lowest offer, no financing condition. Both higher offers didn't have financing. So... get your financing in place. No reason not to if you're in the market.
Deal Guru
User avatar
Sep 14, 2003
10876 posts
974 upvotes
Mississauga
jayoldschool wrote: I sold my home last month. Three offers over ask. I went with the lowest offer, no financing condition. Both higher offers didn't have financing. So... get your financing in place. No reason not to if you're in the market.
Just my own $0.02:

I would consider finance and preinspection to be reasonable conditions, and would not hold either against the bidder. That being said, if I have to choose between a clean offer and one with conditions at the same price, why not?
4chan melts your brain.
[OP]
Newbie
Oct 6, 2010
19 posts
3 upvotes
toronto
Supposedly, even if you qualify for a mortgage, and if you put under 29%, CMHC can step in and claim you overpaid for the property that is overvalued in their eyes so you have to put down more
Sr. Member
Nov 22, 2019
791 posts
601 upvotes
It would depend on where you are located in Ontario. For example, in Toronto, buyers usually don't put in a Financing clause in their offers, because they know that it will make the offer look weak as compared to other offers.
If it isn't a very hot market, I don't think you should have any problems with an Offer with an inspection/financing clause.

And ofcourse, if you are unsure of financing getting approved, it would be best to not remove that clause as it can get you in legal trouble later. Try getting pre-aproved and talk to your mortgage agent first to see where you stand.
Deal Fanatic
Jan 15, 2017
5230 posts
5267 upvotes
Ottawa
Varies from seller to seller. Some won't care - others will.

The question though is why haven't you got your financing in place? Even a pre-approval letter from a lender would add value. That is the question that the seller will ask themselves. If this person hasn't even been to the bank yet then their offer may not be worth the paper that it is written on whereas another offer without the condition is worth more. In a competitive market, not having your financing in place just shows that you are not a serious buyer.
Sr. Member
May 10, 2017
627 posts
441 upvotes
Depends on offer
But I would go with no conditions if offer wasn’t that much higher.
Hassle of dealing with conditions and potential headache negotiation back and forth is not my cup of tea
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Deal Addict
May 23, 2017
1357 posts
1343 upvotes
As someone who recently sold a house...I would not even look at your offer unless all the condition-free offers were way under ask. Or obviously if you were the only offer, but don't expect that to be the case in a hot market.

It sounds like you got your financing but are afraid the bank will claim that the house isn't worth what you offered upon appraisal and will ask you to pay the difference. While this is definitely a risk to keep in mind, it's generally not going to be a danger with any reasonable offer (even one that's way over asking).

To mitigate this risk I'd suggest getting an agent you trust to advise you on the max "reasonable amount" by looking at comparables and not going over this.

Worst case scenario, even if bank appraisal comes in lower you should be ok just might need to get a mortgage with less than 20% downpayment.
Deal Expert
Feb 29, 2008
19086 posts
17424 upvotes
Tarrana & The Ri…
As others have said, financing condition is a non-starter. But if you are the only offer then anything can happen I guess. In the past I can tell you I didn't want to work with any of those kinds of offers. But if I was desperate to sell, maybe. Something tells me this property will have other offers?
Deal Guru
Feb 9, 2009
12368 posts
11266 upvotes
Financing you can get away on higher priced properties cause of the limited buyers but under 1 mil? Unless its a shithole, its gonna be tough, especially if they are having an offer night... if your comparing multiple offers the clean no conditions will usually win... unless you said you offer a nice hefty premium to make it worth waiting for financing.

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