How many offers did you have to make? How many bidding wars did you endure? What is a conditional offer? If we are here… it was all worth it.  Happy day – congratulations!

What Now?

Accepted Conditional Offer

If your offer has been accepted with conditions on financing, inspection, or something else, it’s time to get to work.  Let’s assume you made your deal on Monday, and you’ve asked till Friday at 11:59 p.m. to fulfill conditions.  Until that time, the ball is firmly in your court.  The option to firm up and complete the purchase or to walk away is yours to make.  You will need to provide your deposit money within 24-48 hours, and then move on to the conditions.

*Remember that you must act in good faith. This means you will take steps with the goal of removing your conditions and completing the transaction.  You may choose not to firm up the deal ONLY on the basis of the conditions you have included.  You cannot keep shopping for a better deal and refuse to remove conditions just because you found a house you like better.

Financing

Make sure that your realtor has contact information for your mortgage person.  They will send the lender receives copies of all the paperwork they need to get working on your final approval.  We like to keep in touch with the mortgage broker every couple of days to see that things are progressing as they should be.  When lenders are very busy, they tend to take till the last day to issue the final approval, which can be a bit nerve-racking.  Staying in contact helps keep stress down, and it can help avoid last minute panic if there are problems.

The lender may or may not have an appraisal done during the conditional offer period.  Of course, to be 100% certain of financing, it is ideal to have it before removing the finance condition.  You’ll want to talk to your representative to see if you can safely firm up your deal on the agreed date.

Should the lender be unable to get your approval by Friday night, you have some options:

• You can ask the seller for an extension on the condition.  This is rarely well-received, but you may try to explain the situation to see if they will agree.  (It is especially unlikely that the seller will agree to an extension on this condition if there are still other interested buyers waiting in the wings.)
• You could take your chances and firm up the sale if you are quite confident that you will get the approval.  This may be risky, especially if you have a very small down payment.  Discuss this with your mortgage person before deciding.
• You might decide to let your offer “die,” and re-submit it when you’re sure you can get the mortgage.  The danger is that the seller could get another offer in the meantime, and you could have to start house hunting all over again.

Inspection

Get some referrals to make sure you have a good, qualified inspector.  Call a few, and see who you feel most comfortable with, and then book a time.  You’ll have to coordinate with the seller for access to the property.  Expect the inspector to spend at least 2-3 hours at the house, depending on the size of it.  For rural properties with septic systems, you may have to book a separate professional to inspect that.

Your realtor will attend the inspection, and you can be there the whole time, if you wish.  If you would prefer, you can come for the final summary of their findings – the last half hour, usually.  This is a good time to ask questions and learn a bit more detail about the house and property.  You will receive a written report shortly after the inspection, and we recommend that you review it before firming up.

It’s important to remember that the inspector is not there to sway your decision.  His job is to tell you everything he is seeing, however minor (or major!) to help you to decide whether you want to complete the purchase of this property.  Most inspectors will offer some kind of opinion on the overall condition of the house, and will explain which items are of real concern.

There is a misconception among some buyers that the seller will have to fix every problem that the inspection uncovers.  However, this is not the case at all.  It is completely normal for there to be minor maintenance items listed, and for there to be suggestions for improvement.  

As a buyer, you should try to focus on unexpected issues, such as mould, structural issues, safety issues, or other very expensive necessary repairs, like septic systems.

If you find problems…

Once you have the results of the inspection, you will have to decide how to proceed.  You can:

• Accept the house as it is, and fix problems after you take possession.  If the issues you find are relatively minor and in keeping with the age and general condition of the house, this is the most common outcome.
• Ask the seller to perform repairs before closing.  The risk of doing this, besides that of having them refuse to do it, is poor workmanship.  You have very little control of how well the job is done.
• Negotiate a reduction in the price to offset the cost of doing repairs after closing.  This, in our opinion, is usually a better solution for you if you must re-negotiate, since you are the future owner of the property.  You can use the money to have the work done to your standards and have peace of  mind, knowing who did it.

Other Conditions

Some other conditional offer things could involve a review of condominium status certificates, lawyer approval of the entire agreement, or the obtaining of insurance.

Start early in the week making sure that all documents go to the people who need to see them.  Have your realtor communicate clearly what the timeline is so that there is no delay.

Where you need to shop around for insurance, get a list of as much information about the property as you can get. Typical questions include:

• Age of house
• Age of roof
• Age/type of plumbing, and when updated
• Age/type of electrical service, and when updated
• Age/type of heating system
• Whether there is a fireplace
• etc

(Often, a conditional offer means, on obtaining insurance shows up when buying a property that is heated by oil.  The insurance company may agree to insure you for a period of time with an agreement to switch to a different heat source.)

No Later Than Friday

By Friday evening, you should have all the information in your hands that you need to firm up – that is, to remove the conditions from your offer.

There are three ways to draft the final paperwork that results in a “SOLD” sign going up at your new home.

• A Notice of Fulfillment
• An Amendment
• A Waiver of Conditions

A Notice of Fulfillment states that you have satisfied all your conditions and are removing them without modifying the original agreement.  You sign this and send it before 11:59 p.m. on Friday to firm up your agreement.  As long as the seller receives this notice in time, the house is yours!  Timing is very important – if this document goes out at 12:00 a.m. on Saturday, it could invalidate the sale.  Always respect time limits!

An Amendment modifies a contract.  The wording usually includes the phrases “Delete” and “Insert.”  As in, Delete a certain provision or clause in the contract, and then Insert a new wording, detail, or clause.

For example, if you negotiate a reduction of $5000 toward mould remediation, your amendment might say:

Delete: Purchase price $750,000

Insert: Purchase price $745,000

These changes must be agreeable to both parties, and the seller has to sign the acceptance of the changes for the deal to become firm.  It is usually wise to get verbal agreement for an amendment before sending it, since the seller is under no obligation to agree.  They can insist that you either firm up under the original terms and conditions or end the deal on your conditional offer.  If you can’t come to an agreement, you would get your deposit money back.

A Waiver acknowledges that you chose not to fulfill conditions, and that you accept the risks.  You might send a waiver if you decided not to have an inspection, after all.  As long as you send the waiver before 11:59 p.m. on Friday, your deal becomes firm.

After a busy week fulfilling conditions, you may need a day or two to recharge your batteries!  But there is still a little bit to do before the adventure is over.  Here’s what you can expect between SOLD FIRM, and CLOSING DAY…