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Risky subject-free offers

When you start down the road of buying a home there are many new and unfamiliar terms you may hear. Arguably, some of the most important things you need to learn about are the “subject to” conditions to include in your offer to purchase.

When you write an offer to purchase a home, your realtor will offer guidance as to the conditions you include. Common conditions you will see are:

  • Subject to arranging suitable financing
  • Subject to a satisfactory home inspection
  • Subject to arranging home insurance
  • Subject to review of strata documents
  • Subject to the sale of your current home

If you are purchasing a rural property or are in a unique situation you may also see:

  • Subject to a water potability test
  • Subject to an inspection of the septic system
  • Subject to the seller finding a suitable home to purchase

These lists are not all-encompassing by any means.

The purpose of adding conditions to your offer is to protect you in case there are any issues with the home you are looking to purchase.

In previous columns, I’ve written about the potential dangers of writing a subject-free offer. The high-level, quick position is that if you write a subject-free offer you’d better have cash on hand to buy the home.

Over the last two years, I’ve seen multiple clients feeling like they have been forced to write subject-free offers just to be able to have their offer accepted by the sellers.

I have worked with several clients over the last few months that have written subject-free offers. We do absolutely everything ahead of time to try to ensure they will be successful with their financing.

These files stress me more than you can possibly imagine.

My advice to clients who require financing to purchase a home is to include a subject to financing clause in their offer. The reality in our market is that by including that clause, sellers tend to choose other offers that do not have a financing clause.

Out of desperation clients are writing subject-free offers.

What are the dangers of writing a subject-free offer?

One file I saw last year involved the purchase of a strata unit. The condo itself was beautiful and my clients were ecstatic to nail down an accepted offer.

When we received the strata documents from the listing realtor, it was evident that the strata had been poorly managed. There was extensive work that needed to be done to the building, and the strata did not have anywhere near the funds it needed to complete work that urgently needed to be done.

When the lender and insurer reviewed the strata documents, they declined the file and flagged the condo complex. My clients were initially devastated.

They had written in a subject to financing clause, so they were able to collapse their offer.

What likely would have come shortly from the strata was an increase in monthly strata fees, a levy or special assessment against each of the units to raise money quickly for the needed repairs, or a combination of both.

Had they written a subject-free offer they would have been in a very bad spot.

There are certainly other dangers, like skipping a home inspection and finding major issues to contend with once you are into the home.

Make sure you do your due diligence and have your ducks in a row as you move forward with an offer to purchase.

If you are selling a home, please consider looking at offers that include a subject to finance clause. All of the realtors that I know work closely with their clients to make sure they have their financing lined up before writing an offer.

There are some amazing people out there looking to buy homes. Don’t rule them out.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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About the Author

Tracy Head and Laurie Baird help busy families find mortgage solutions. Together they have more than 45 years of experience in the mortgage industry.

With today’s increasingly complicated mortgage rules, Tracy and Laurie spend time getting to know the people they work with and help them to better understand the mortgage process. They support their clients before, during, and after their mortgage is in place.

Tracy and Laurie work closely with their clients, offering advice and options. With access to more than 40 different lenders, Tracy and Laurie are able to assist with residential, commercial, and reverse mortgages in order to match the needs of their clients with the right mortgage package.

They work closely with their clients to find the right fit, and are around to provide support for years down the road!

Contact them at 250-862-1806 or visit

Visit their blog at


The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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