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Originally Posted by MacDougalbry
If you are going to buy right now be very, very careful. Don't waive the "subject to financing" condition. The reason sellers are asking for this condition to be waived is because, in some bidding frenzies, some properties are going for far beyond current market value, and realtors know that there is a good chance the bank will refuse to mortgage these properties. Also be sure to do your own "due dillegence" on market comparables. Someone just bought our neighbour's house for $640,000. This house was built about 15 months ago for $350,000 and was probably only worth about $500,000-$550,000 in the current market.... homes have sold on WeList on our street for $440,000-$510,000. However, buyers were given comparables from MLS for houses on another street... houses on larger lots with designer interiors that back onto a treed ravine. (Our neighbours do not.) In the current market, if you don't have time to do proper research, you are going to get screwed.
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I have to dissagree with you, the reason the finance condition is being waived is to make the offer more attractive to the sellers. Basically the finance condition is an out to purchase the property you have say (7 days) to back out of the contract claiming you couldn't get financing, therefore the sellers would have to put the house back on the market and more hassel for them especially if they need a quick sale. I couldn't see a realtor trying to sell a house to someone who couldn't get qualified for the mortgage to make a sale, huge ethical problem and that is a big no no in the industry.
Now don't get me wrong waiving the fiinancing condition could be a huge mistake if you're clients haven't been pre-approved for a set amount (which is very very important) because if they haven't and like you say over spend out of their means and don't get a mortgage then they're on the hook for the deposit. I try as much as possible to get a financing condition in with my clients but the odd time when I'm in a multiple offer situation and I know my clients are pre-approved for a set amount I will give them the option to take out that condition cause they know they will get a mortgage for that amount no matter what the house sells for. I also always leave in a property inspection condition which is bascially the same as having a finance condition in there anyways.
I know there was a new story about it and how dangereous it is but that's because these un-conditional offers are being put forth without knowing what the buyers with qualify for. I feel the property inspection is way more important than the financing condition, you never know what's wrong with a certain house, with financing at least you know if you've talked with your bank or broker.