We’re not going to sugar-coat it, real estate in the GTA is just not the seller’s market it once was.
As market conditions tilt towards the middle, home buyers are experiencing greater power and flexibility during the buying process. One of the most significant developments in today's market is the return of conditional offers.
Whether you’re buying or selling, neutral market conditions mean navigating a myriad of new factors along your real estate journey. Thankfully, we can help! Call or text us.
Conditions Are Back
During the seller’s market heyday, buyers were frequently competing against other people on the market. As for-sale homes typically received multiple offers from those interested, buyers began foregoing conditions (also called contingencies) in an effort to be competitive. Despite creating risks and challenges for buyers, this trend stuck.
In 2022, the GTA’s buyer pool has shrunk noticeably compared to years past. With an overall reduction in buyer competition, conditions have finally returned to GTA real estate. This is good news for buyers as they’ll be better protected during their home purchase.
What’s In A Condition?
First and foremost, conditions will always come with a deadline. The process of buying or selling a property can be very stressful, and no one wants to spend weeks or even months trying to finalize the sale. Therefore, each condition included in an offer will come with an established timeline. These timelines, among the other details within each condition, can be negotiated between the buyer and seller before settling on an agreed deadline.
Conditions must also be distinct and easily measurable. As a legally binding contract, there should be no grey areas or conditions where the results or outcome are up to interpretation.
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Buyer financing is one of the most common offer conditions in today's market. Essentially, this condition prevents the deal from being finalized if the buyer can't secure adequate financing for the home.
While this condition has been picking up steam lately, we always advise receiving mortgage approval before anything else. This can help you avoid the heartbreak of finding the perfect home and making an offer only to have the financing fall through. Your bank or financial lender will check your credit, employment, and downpayment savings to determine whether you qualify for a mortgage (and for what amount).
For buyers, home inspections are an essential step in evaluating potential risks that may come with the property you’re interested in. During the peak of Toronto’s booming buyer’s market, some buyers would unfortunately bypass home inspections in an attempt to be more competitive. Thankfully, this important condition is making a comeback.
When you receive the inspection report, it is critical that you sit down with your real estate agent and carefully review it. Be ready to ask clarifying questions about any repairs and related expenses that are required.
Are you planning on buying a home in Toronto? Click here to check out our list of 5 home buyer mistakes to avoid.
Tenant conditions apply to certain properties that have renters living in them at the time of sale. These conditions typically ask that any tenants be removed or evicted from the property by the date of possession. In Ontario, these conditions can be somewhat complicated as renters have pre-determined rights regarding evictions. Usually, these rights boil down to providing sufficient notice to the existing tenants, with a legally-adequate eviction timeline being established within the condition.
If the buyer is purchasing the home for investment purposes, they may also have the option to assume the existing tenants.
Buyer’s Home Sale
Although they’re not very common in the GTA, conditions pertaining to the sale of the buyer’s home are worth taking into consideration as you could run into them at some point in your real estate journey.
Also called an “SOP” or Sale of Property condition, this contingency stops the purchase from going through if the buyer’s existing home does not sell within a specific time frame. As this condition introduces additional risks to the seller, it’s relatively easy to see why it’s unpopular. However, if a property remains unsold for an extended period of time, an audacious buyer may attempt to include an SOP condition in order to create a financial safety net for themselves.
SOP conditions often include an escape clause, which allows sellers to continue receiving offers while the buyer’s home is still for sale. If the seller receives a better offer, buyers have the option to drop the condition or simply break the deal and move on.
What to Know About Conditions & Condos
In the GTA, condos are subject to several of the same conditions as homes and other properties with a few key additions, such as status certificates. Status certificates are documents which contain important information about the condo unit, condo building, board and corporation. They cover essential details like condo fees, upcoming building upgrades, legal disputes regarding the building or corporation, and the size of the reserve fund.
Are you looking to buy or sell distinctive real estate property in the GTA? We can help. Give us a call.