The real estate market in Kitsilano (and Vancouver in general) has been very busy the past year. Listings agents often wait until the Sunday night, Monday or Tuesday evenings to review any offers on a home for sale, which gives all interested Buyers not only a chance to view the unit, but a chance to do as much due diligence as possible which can lead to stronger and higher offers.
“Subject Free Offers” was perhaps the word of the year in 2015, and that pattern has continued into 2016. If you’re in the market to purchase a condo, townhouse or house in Kitsilano, you need to know what this phrase means so you can be competitive.
What is a Subject Free Offer?
A subject free offer on a property is an offer that is immediately firm and binding upon acceptance by the Seller. Typically, offers are submitted to Sellers with conditions that allow the Buyer to do due diligence on the property before the offer to purchase is firm and binding. This allows the Seller and the Buyer to negotiate the dates, price and other important terms of the contract before the Buyer puts in hours of due diligence and hundreds of dollars into a home inspection. The Buyer then typically has anywhere from a few days to a week to satisfy and complete these tasks (the timeframe is stipulated on the contract). If the Buyer is not satisfied with something they learn during this due diligence period, they can terminate the contract and walk away from the property, no harm no foul. The typical subjects on a Contract to buy a home are:
- subject to the Buyer getting and being satisfied with a home inspection
- subject to the Buyer receiving and being satisfied with all of the strata documents and other pertinent written information on the home (these documents are listed in detail on the contract)
- subject to the Buyer receiving and being satisfied with mortgage financing
Subject Free offers are offers where none of these subjects are in place, which means the Buyer should have done their research in these details prior to submitting an offer since once a subject free offer is accepted by the Seller, it’s firm and binding so the Buyer must go through with the purchase or face serious legal problems.
It’s definitely possible to read Strata Documents and other information on a home (titles, surveys, property disclosures, etc) prior to submitting an offer. Home inspections can be done prior to submitting an offer, though there is a chance that Buyers may be wasting their money if their offer is not accepted. Official mortgage approval cannot be granted until there is a specific property under contract. This means that a Buyer can offer on a property without the “subject to getting financing” clause if they are 110% confident that they will get a mortgage on a property, however, you can’t be certain financing will come through unless a contract is in place. Speaking with your Mortgage Broker prior to submitting a subject free offer is imperative due to the importance of knowing if there could be any hurdles with your financing.
Why are Subject Free Offers Important?
Subject Free offers are important and happening frequently thanks to competition between Buyers. If more than one Buyer is submitting an offer on a property, you need to do what you can to make your offer the most appealing to the Seller. This can include a great price, working with the dates the Seller prefers, and submitting a strong offer that indicates that you have sone as much due diligence as possible. This gives the Seller confidence in your offer over other offers.
Keep in mind that you don’t necessarily have to go in with a subject free offer in order to make your offer stronger. You can submit an offer subject to only a few types of due diligence.
There are many ways to make your offer stronger than other Buyers, but you want to make sure you are working with a great agent who understands contracts and negotiation, who knows Kitsilano property and the general market, and who has a great relationship with other agents in the city – the LiveKitsilano Team satisfies these requirements.
Talking about contracts and what you need to do to be prepared as a Kitsilano Home Buyer is much easier in person, so give us a call to chat about your home goals.