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Skipped Conditions


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#1 rambaldi

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Posted 20 June 2016 - 08:07 PM

What typical conditions are not being included as frequently in offers in the current market?

 

Thanks.



#2 lanforod

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Posted 20 June 2016 - 09:04 PM

The key ones are definitely financing and inspections.



#3 Sparky

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Posted 21 June 2016 - 04:54 AM

Out in the country, septic field inspections used to be common place. I wonder if that is still the case with the current market conditions.

#4 Rob Randall

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Posted 21 June 2016 - 06:55 AM

I know a Langley resident who was priced out of the Victoria and Vancouver markets and went to Nanaimo last Saturday to do some house hunting. They looked at two houses (drove by three in dicey neighbourhoods) and by that afternoon had an all-cash offer on a 40-year old house. Panic has set in even there, apparently, with the idea that any complications on your offer will scuttle the deal.

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#5 VicHockeyFan

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Posted 21 June 2016 - 06:59 AM

Well only if competing offers are in the same price range.

A higher offer will still win out in most cases.
<p><span style="font-size:12px;"><em><span style="color:rgb(40,40,40);font-family:helvetica, arial, sans-serif;">"I don’t need a middle person in my pizza slice transaction" <strong>- zoomer, April 17, 2018</strong></span></em></span>

#6 LeoVictoria

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Posted 21 June 2016 - 08:15 PM

Well only if competing offers are in the same price range.

A higher offer will still win out in most cases.


Not what I've heard. The highest offer would not necessarily win if it is conditional and the next highest isn't. Big risk in taking that conditional offer, sometimes better to take the sure thing which in this market is still a stupid amount of money.
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#7 johnk

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Posted 22 June 2016 - 09:01 AM

Take the unconditional if its at all close. Serious buyer not a time-waster. No hassles and you can move on.

#8 G-Man

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Posted 22 June 2016 - 10:09 AM

IMO an inspection process should not be considered a time waster. I would like to see it be mandatory prior to a sale.


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#9 lanforod

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Posted 22 June 2016 - 10:16 AM

IMO an inspection process should not be considered a time waster. I would like to see it be mandatory prior to a sale.

 

I'd be good with that if the certification process to become a home inspector was better. A 10 week program does not an expert make.



#10 VicHockeyFan

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Posted 22 June 2016 - 10:24 AM

Take the unconditional if its at all close. Serious buyer not a time-waster. No hassles and you can move on.

 

If you have 13 offers and the highest one, although conditional is $16,000 higher, I think most real advisers with your interest at heart would say take it.  If it does not work out, go to your next one down, no harm contacting them or the other 11, most will still be in the hunt.  Now, many, if not most Realtors want you to just take the condition-free one, as their commission is hardly changed over $16,000 price, and they can "move on".  

 

But hey, that's just me.  I think waiting 10 days to get an extra $16,000 is worth it.  I don't earn $1,600/day normally.


<p><span style="font-size:12px;"><em><span style="color:rgb(40,40,40);font-family:helvetica, arial, sans-serif;">"I don’t need a middle person in my pizza slice transaction" <strong>- zoomer, April 17, 2018</strong></span></em></span>

#11 VicHockeyFan

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Posted 22 June 2016 - 10:25 AM

Big risk in taking that conditional offer...

 

I frankly see no great risk.  I see lots of reward though, if it's an extra $15,000 or $20,000 over the next best offer, as I've explained above.

 

Maybe Marko can answer this, as I'm not sure.  Can I make the buyer put up a $1,000 or a $5,000 non-refundable deposit with his conditional offer?  ie. I get to keep the deposit if he fails to go unconditional?


<p><span style="font-size:12px;"><em><span style="color:rgb(40,40,40);font-family:helvetica, arial, sans-serif;">"I don’t need a middle person in my pizza slice transaction" <strong>- zoomer, April 17, 2018</strong></span></em></span>

#12 lanforod

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Posted 22 June 2016 - 10:36 AM

The risk could be in the offer falling through, causing other offers (which will have expired, and would need to be renewed), to rethink why and how much. If the condition was inspection, and offer falls through...

I think it depends what the condition is. I'd be a bit leary of taking a financing condition for 16k without knowing the buyers situation better - ie. are they trying to get a large mortgage or selling a different place first?



#13 Greg

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Posted 22 June 2016 - 11:01 AM

I think the real issue is that the conditional offer, while exercising the condition such as a home inspection, uncovers some issue that the seller was previously unaware of, which is now disclosable to all of the other purchasers. Scuttling not just the conditional offer, but effectively all of the offers.


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#14 VicHockeyFan

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Posted 22 June 2016 - 11:09 AM

I think the real issue is that the conditional offer, while exercising the condition such as a home inspection, uncovers some issue that the seller was previously unaware of, which is now disclosable to all of the other purchasers. Scuttling not just the conditional offer, but effectively all of the offers.

 

Well, I was thinking just of subject to financing, not a thorough prodding around of the place.

 

I can understand that.


<p><span style="font-size:12px;"><em><span style="color:rgb(40,40,40);font-family:helvetica, arial, sans-serif;">"I don’t need a middle person in my pizza slice transaction" <strong>- zoomer, April 17, 2018</strong></span></em></span>

#15 VicHockeyFan

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Posted 22 June 2016 - 11:09 AM

I'd be a bit leary of taking a financing condition for 16k without knowing the buyers situation better - ie. are they trying to get a large mortgage or selling a different place first?

 

Through the sales process won't you find out some of this?


<p><span style="font-size:12px;"><em><span style="color:rgb(40,40,40);font-family:helvetica, arial, sans-serif;">"I don’t need a middle person in my pizza slice transaction" <strong>- zoomer, April 17, 2018</strong></span></em></span>

#16 MarkoJ

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Posted 22 June 2016 - 11:21 AM

Problem with taking a conditional offer is the buyer can walk away for any reason including cold feet.  When you go back to the other 10 offers those potential buyers start questioning why the first offer collapsed?  If all the offers are above asking price the seller usually takes the highest unconditional offer.  Let me give you an example.

 

Asking price $800,000 and offers of $880,000 conditional, $862,000 unconditional, and $850,000 conditional the seller will 90% of the time take the $862,000 unconditional.

 

However, if the asking price is $800,000 and offers are $780,000 conditional, $762,000 unconditional, and $750,000 conditional seller will probably go with the $780,000 as all the offers are below asking.

 

I've tried with limited success with my buyers having a portion of the deposit non-refundable.  For example, $30,000 deposit, 7 days for conditions and $2,000 non-refundable for any reason (even if inspection is a disaster).  In theory this puts my buyer ahead of all the other conditional offers which have ZERO skin in the game.  Problem with this strategy this year is it has been such a huge bloodbath of unconditional offers the odds of success even with a non-refundable deposit is slim.


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#17 MarkoJ

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Posted 22 June 2016 - 11:24 AM

Out in the country, septic field inspections used to be common place. I wonder if that is still the case with the current market conditions.

 

There aren't many multiple offers out in the country.  All my clients this year that have bought on septic we've been able to inspect the septic.

 

The unconditional chaos is primarily on sewer and city water properties.


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#18 VicHockeyFan

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Posted 22 June 2016 - 11:27 AM

I've tried with limited success with my buyers having a portion of the deposit non-refundable.  For example, $30,000 deposit, 7 days for conditions and $2,000 non-refundable for any reason (even if inspection is a disaster).  In theory this puts my buyer ahead of all the other conditional offers which have ZERO skin in the game.  Problem with this strategy this year is it has been such a huge bloodbath of unconditional offers the odds of success even with a non-refundable deposit is slim.

 

Interesting.  OK, that answers my earlier question.


<p><span style="font-size:12px;"><em><span style="color:rgb(40,40,40);font-family:helvetica, arial, sans-serif;">"I don’t need a middle person in my pizza slice transaction" <strong>- zoomer, April 17, 2018</strong></span></em></span>

#19 VicHockeyFan

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Posted 22 June 2016 - 11:31 AM

Another question, Marko.

 

Say you are representing a buyer.

 

When their above-list-price offer is accepted, is it normal all other offers are revealed?  Or do they remain theoretically secret and only the seller knows them?  It seems to me in this market, a buyer could be mad at you and your advice, if it's revealed he was $25,000 over the next-highest offer.  And now he's gone and done a no-conditions offer, and has to close, while second-guessing the price he's agreed to. 


<p><span style="font-size:12px;"><em><span style="color:rgb(40,40,40);font-family:helvetica, arial, sans-serif;">"I don’t need a middle person in my pizza slice transaction" <strong>- zoomer, April 17, 2018</strong></span></em></span>

#20 MarkoJ

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Posted 23 June 2016 - 12:51 AM

Another question, Marko.

 

Say you are representing a buyer.

 

When their above-list-price offer is accepted, is it normal all other offers are revealed?  Or do they remain theoretically secret and only the seller knows them?  It seems to me in this market, a buyer could be mad at you and your advice, if it's revealed he was $25,000 over the next-highest offer.  And now he's gone and done a no-conditions offer, and has to close, while second-guessing the price he's agreed to. 

 

I've yet to have a pissed off buyer; I just tell buyers to offer what they feel comfortable with based on comparable sales and the context of the nuts market.  Also with prices going up 2% per month even if you overpay a few months later you are fine.  However, when the market turns then people will be pissed with their irrationally purchases.

 

$25,000 over the next-highest offer is relatively low to be honest.  Buyers are regularly and irrationally paying $150,000 over the next highest offer to secure a property.  That's the function of bidding blind and emotions taking over.


Edited by MarkoJ, 23 June 2016 - 12:53 AM.

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