Let’s talk about the elusive SUBJECT FREE offers.
The Vancouver condo market is HOT. Most listings don’t last through the weekend, and multiple offer situations are common. Strong, which usually means Subject Free, offers are important if you want to win. So why not Subject Free? Well, without preparation and professional advice, mishandled Subject Free offers can result in messy, costly legal trauma. Two of my buyers this month lost heated bidding wars to Subject Free offers. I want to take an honest look at these offers and give you guys an inside scoop at the pros and cons to this strategy.
In short, it is an offer prepared by the Buyer that does not allow the Buyer to walk away for any reason if accepted by the Seller (no subject to inspection, no subject to financing, no subject to sale, etc.).
So, if the Buyer doesn’t come up with financing, they’re still on the hook. If the condo turns out to be leaky, creaky, haunted by Elvis, or the walls are riddled with Asbestos… SORRY BUYER, you must complete the deal!
Offers with Subjects on them often take up to 7 days before they’re firm and binding, and about 20% of Subject offers don’t complete. From the Sellers corner, Subject Free is the way to be!
I sat down with both of my clients after these unsuccessful bidding wars to talk SUBJECTS!
First, you need to hire a qualified Realtor that has the time to help you with your due diligence and prepare the offer for you (duh, me!). I would not recommend using a Realtor that is juggling too many clients. These offers take focus and attention. And most importantly, if you still have questions call your LAWYER.
Now, prepare! Get something in writing from your financial institution confirming your financing on the prospective property. Get a building inspector in immediately! Often, they can complete inspections before the Seller is even looking at offers. Chug a gallon of coffee and read those documents! A good Listing Agent has the STRATA documents all lined up and can email them to you right away. Be sure your Realtor and Lawyer have answered every single question so that you are confident in your offer.
The final and most important step- STOP! Check in with yourself and anyone else involved in the purchase. Are you sure this property hits at least 90% of your needs? If you are in doubt DO NOT SUBMIT! Remember, you cannot back out of a Subject Free Offer.
After consideration, one of my clients is going to move forward with a Subject Free Offer, and the other one has decided to wait and see what happens (he doesn’t want to remove Subject to Sale of his current property, this is a very hefty subject). I’ll keep you guys posted on the outcomes!