How Different Real Estate Clauses Can Affect Your Buying Experience

Buyers may hear the terms 'subject to clauses' thrown around a lot when searching for a home, but they may not know exactly how to use these conditions to their advantage. While it's impossible to foresee every situation, these stipulations are available to home buyers so they can get out of a contract if an unanticipated fiasco arises at the last minute. Buyers should learn more about how the main ones work, so they have every opportunity to safeguard themselves.

For informational purposes only. Always consult with a licensed mortgage professional before proceeding with any real estate transaction.

Financial Clauses

This clause essentially states that the buyer will need to obtain a satisfactory loan to move forward with the purchase. The terms depend on the province upon which the home is located, but will usually be give the buyer four business days to secure financing. Waiving this condition is possible for those who have deep pockets, but it's not necessarily advisable. If the buyer is uncomfortable with the terms of the mortgage, it's likely because they're afraid they won't be able to make the payments. This clause turns out to be an important one for many buyers, especially considering lenders have been known to change their tune when it comes time to actually close the deal.

Inspection Clauses

It's normal for home buyers to want to order their own inspection before they follow through with the purchase—even if the seller has recently completed an inspection prior to listing the home. This is because sellers may hire disreputable inspectors, or they may have just hired someone who failed to miss an important problem. Most inspections only take a few days to arrange, though buyers are allowed to account for special circumstances. For example, buyers can potentially ask for additional leeway in more rural areas (in case there are only so many inspectors to hire), or ask to speed up the process if they're in a hurry to buy the home.

Sale Clauses

Sale clauses are for buyers who are selling their previous home. In this case, a buyer can ask a seller to move forward on the sale only when they sell their last property, thus saving a buyer from having to make two mortgage payments for months on end. This is usually only a clause that can be requested in a buyer's market. In a neutral or seller's market, the seller is taking a big chance that the home sale will go through according to the buyer's wishes. Sellers are highly encouraged to give buyers an ample amount of time even if this condition is never enacted, though it doesn't always work out that way.

Safe Advice

An experienced real estate agent is the best person to talk to about how to use clauses in a contract, particularly because they aren't always recommended. Even in the most competitive markets, buyers can sometimes have unrealistic expectations of what they can expect from sellers. Understanding both the pros and cons of each clause is the best way for the buyer to get the home they want under the terms they want (or at least, the terms they can settle for.)

Buyers can request any number of conditions in their home sale, but these are some of the most common ones in Canadian real estate. Making a list of priorities or discussing your personal situation with a Sandstone agent can really help buyers make decisions that they feel comfortable with.

For informational purposes only. Always consult with a licensed mortgage professional before proceeding with any real estate transaction.