Most common conditions when buying a house
Buying or selling a home involves extensive knowledge. It is important to educate yourself on as many details as you can. Also hiring a realtor will be very important and s/he should explain as much as possible about the process of buying and selling as well as possible pitfalls. Also, a realtor should be able to refer you to experienced professionals you also need in the process, like a home inspector and a lawyer.
When you buy a home, you have the possibility of adding conditions. What are the most common conditions when you buy a home?
- Financing condition
Pre-approved or pre-qualified still does not mean you can leave the financing condition out of the contract. Many people do not know that the bank or mortgage provider checks your financial situation again, once you have put in an offer. We actually have seen this happening where people ruined their credit score between the moment of pre-approval and the actual purchase of a home. Ruining your credit score can easily happen when you buy large items or forget to pay your credit card bills on time. Unless you have the full amount of cash safely tucked away in your bank account, waiting for the perfect home to come by, you always have to put in a financing condition in the contract when you purchase a home.
- Home inspection
As written in the post about a home inspection, we always strongly recommend to do one on the home you will buy. The home inspection is a condition that is already pre-written in the contracts that realtors use. Those contracts are written by AREA, the Alberta Real Estate Association. All you have to do is check off in the contract that you will have a home inspection done, and give a date by when it will be performed. You also have the option to write down how much dollar amount, or percentage you will absorb as the buyer and at what amount you will ask the seller contribute to have things repaired. If the home inspection comes back with severe material defects on the home, you are able to walk away from the transaction. Make sure your realtor explains all your options when it comes to the condition of the home inspection.
- Condition of selling your own home
When you have a home to sell, there are several options to think about. Do you sell your own home first or buy a new home first, and then sell your home? If you decide to buy a new home before you sell your own home, you may want to put in a condition that you buy the home, only upon selling your own home. In Calgary, this option comes with a few important notes. One is that you will have to list your own home within 24 hours of your purchase. We wrote an article about the condition ‘sale of buyer’s home’, which may be important to read. Either way, discuss this option with your realtor. Also, this strategy may not always work in sellers market.
- Condition to review title
In Calgary, every home has a title. This is a very secure system and the title of a home may indicate very important things. What are restrictions on a title? Are there encroachments? Is there any “lis pendens” on title? (a written notice that a lawsuit has been filed concerning real estate). There are many things on title that may affect your decision to buy a certain home. Let your realtor always pull title and seek legal counsel if things are not clear. Putting this condition in a contract is not often done but it is a good practice.
You can put in more conditions, but the above are the most common that we see in today’s purchase contract when you buy a home.