Although it sounds like mostly everyone should be aware of this important buyer step, not many Real Estate purchasers are aware of its full details and process.
Just yesterday I had a meeting with a nice young couple as a first time buyers. At first we discussed their limit and budgeting and after understanding that they already obtained pre-approval from their financial institution we moved on to the property type and the desired criteria or typical wish-list.
They were debating between townhouse or detached house for sale based on a limited budget available. Because of their 11 year old daughter, they needed to be looking for a family friendly neighborhood close to school and shopping. They were open to even a further areas like North Van or East Vancouver.
This was great, as by including house or townhouse for sale in expanded areas in Vancouver, they widen up and open more selections.
As a Vancouver REALTOR@, I'm careful and detailed in asking every question and am not leaving any detail out. We spent a good quality time covering all pros and cons of every location, talked about a very detail wish-list, and then we talked about the process involved.
This couple had no idea that by presenting an offer, they have a good chance to do all the due diligence and research about the property. This property detail research can be performed while they have a conditional offer on the subject property for sale and to make sure everything is safe and sound. This was assuring for the couple knowing that they can thoroughly research the property before they fully commit to it.
To elaborate this subject, when presenting an offer, there are many things that requires review and research about the property and its condition. To do this properly, when a buyer makes an offer, they have a choice to include these conditions (known as subjects) in their offer.
What are the commonly used conditions (subjects) that a real estate buyer use in their offer?
Depending on the property and its type, length to remove and be satisfied with condition can vary, but a typical residential property in a known zone and age with clear title, commonly use 7-10 business days to satisfy their conditions.
The following subjects are in Buyers benefit and it is only the purchaser who has the right to claim them satisfactory by a certain date (When subject or condition due diligence are satisfactory to the buyers, the sign a subject or condition removal form, which at this time they commit to purchase the property and close at a certain date.)
- Subject to Financing:
This subject assures that the financial institution provide the buyer with a confirmation of full approval with a rate and terms of their satisfaction by a certain date.
- Subject to Inspection:
At a buyer's cost and seller guaranteeing access to the house or townhouse for sale, buyers hire a reliable, professional and licensed inspector to thoroughly inspect the property by a certain date.
- Subject to Title search and review:
Right now it is mandatory for a listing agent to provide a title search at a time they list a new property for sale MLS® and its listings. It is buyer's responsibility to have a legal adviser to review this form and research every related covenant, easement, lien, or scheme mentioned on this title by a certain date.
This is very important as many single detached homes are mistakenly assume to have no covenant or scheme. But the assumption are wrong and certain neighborhood houses have registered covenant limiting rentals, car on driveways, yard maintenance and such.
For instance, a buyer is looking to use their basement suite as a mortgage helper and by looking at a single family detached, which has a separate suite, despite of it being unauthorized for additional accommodation based on the property zoning, they purchase it accepting the risk of dealing with city if someone complains. But it is not the city that will come and knock on their doors but neighborhood counsel have schemes and covenant against rental.
- Subject to review strata documents (if it is a strata property for sale)
If the buyers are purchasing townhouse and or condo for sale, it is crucial to include strata documents review. This condition, protects the real estate buyers to review and research all annual general meetings (AGM), all their notes, up-to-date financials, depreciation report, Form B (Which is important guideline signed by the strata president confirming the subject unit's monthly fees, parking, storage, and many other legal important answers toward the particular unit), Form F (another important form confirming the unit has paid all financial owed to the strata and has no debt), and lastly all monthly agenda of strata and its history.
- Subject to review property disclosure statement:
This subject is a communication from the seller of the subject property disclosing every information known to the property. Legally there are two defects to disclose:
A- Patent Defect:
This defects are visible to the eyes and can be easily discovered by doing an inspection
B- Material Latent Defect:
Not visible defects and it cannot be detected by a regular inspection.
The second defects are important and are to be legally disclosed by the sellers. As an example, if the current owners are aware of a past leak or water damage in the house, the should inform the potential buyers even if the problem was remedied and fixed.
The disclosure review is important for a real estate buyers since it leads them to do a thorough inspection. If an inspector is limited and does not do asbestos and or for instance parameter drain check, then the buyer to hire a related professional for that purpose.
- Subject to property Fire/House insurance
At a closing time, it is important to have home owners insurance in place specially if there is a mortgage. Buyers to contact their insurance broker to Research and making sure that the house or townhouse for sale is insurable. Not every property is insurable by insurance companies or if it is they might have premium rates. As an example, properties with Poly-B material plumbing, old "knob and tubing" electrical, and or no certificate or no numbered wood stoves can be questionable for insurance companies.
There are many other subjects or conditions a buyer can place depending on their need and the property type requirement. If you have a question and want to know how to protect your offer, I'd be happy to help. As local Vancouver Realtor with many client base, I have protected, negotiated, re-negotaited and provide great value for my clients.
As my motto says, I offer Real Estate from A to Z.