Conditional Offer Process (Condo-Hunting)

[flamesrule_kipper34]

I didn't wanna hijack iggyntangs thread so I thought I'd create my own, it's sort of a similar position.

I made an conditional offer on a condo recently and I found out through a couple of lenders here that it is a bitch and a half to get a mortgage for it because no one wants to insure it. I've researched into this condo it seems it's hard to sell off because of this very predicament (insurers are hesitant due to the renters situation within the condo).

Now I'm at the point where I've made an offer, however looking into it I know that the seller here is at a disadvantage becauuse I know they've tried to sell it for some time with no success and I believe a couple-few offers have gone down due to financing reasons (I assume due to people not having 20% down for this place).

What I want to do is use my position of power and withdraw my offer or simply not waive conditions and let the deal die and then make a new offer with my new found position of strength letting them know I know how hard it is to finance this condo so I want to make a new offer that's lower...can I do this? Is there precedence for this situation? Basically I look at it like, I've viewed the property more in depth through the documents and the history and believe the property to be worth less in fact. (Oh and if I make another offer can I do it thru the same realtor or would that not be prudent or make sense?)

Any help would be appreciated on this matter, thanks all.

[GP_Matt]

Just tell them that you need 20% down and only have enough money to cover this much.

I have no idea how the legality works when it comes to conditional offers. I had a realtor tell me that I should make a conditional offer on a house I didn't like to prove that I was serious. She said not to worry about the offer because you can just say financing fell through and back away. (I fired her a few minutes later though so I don't have any faith in her advice.)

[Winsor_Pilates]

Curios after reading this and iggyntangs thread.
Are either of you purchasing with a Realtor?

Don't mean this in a jerky way, but it seems both questions/situations should have easily been answered/guided through by your Realtor, and not need the help of almighty CP.

[Ducay]

Legally, I think you're fine to not waive conditions and the deal die; if its not done using the financing condition, you can kill the deal based on condo docs review or inspection (if applicable).
The seller may hate your guts though, so be warned.

[flamesrule_kipper34]

I am purchasing with a realtor personally but I feel that they're somewhat out of the loop in terms of how hard it is to finance with this condo building.

They're great and all with a lot of things but I feel that they don't understand the situation well enough from my end with the mortgage/financing side of things.

At any rate I'm just wondering, if I let this deal die, can I talk thru my realtor to the seller and let them know I do want to purchase the condo still but at a re-negotiated (lower) purchase price due to what I have discovered about it.

Basically I'm wondering would it be prudent to do this by killing this deal (by no waiving conditions) or to talk thru my realtor to the seller's realtor explaining the situation with the difficulty of financing of the condo (and if I were to kill the deal but come back to it with a new offer if I could do that with the same realtor I'm currently with or what).

Again any help would be much appreciated CP, thanks.

[newts]

Your best bet would be to leverage your condo docs condition to either walk away from the deal or to ask for a reduction in the purchase price based on information you gained from the condo doc review. The nice thing about condos, is that the condo docs condition gives you a really easy out of your deal. I had a deal going last year for a seller that had his buyer state that she didn't like the fact that the condo development restricted the colour of window coverings you could put into the unit. She walked away due to this reason. Although I'm sure there were other mitigating factors in this case (like cold feet), my point is that the condo docs condition gives you an easy exit.

From a strategic perspective, exiting the deal and then coming back to the table may not be your best move. It will probably be perceived by the seller as shady and a bit of a backhanded move, which puts you in a worse position vs. where you're at now.

Therefore, I'd put your cards on the table now, say that your uncomfortable with the condo docs, and ask for the price reduction now or you will walk away.

[ranchlandsselling]

If your intention was to finance x amount of the purchase and you can't get it I'd consider that condition have fallen through. If you want to go back and put down an amount equal to 20% of the purchase price then by all means negotiate. That's totally a negative on the property and should be priced in accordingly.

If you think about buying from the investment persective often the amount of leverage (down payment) you're able to use is the biggest factor in purchasing.

[onetwo_threefour]

First, go back and edit the OP to remove any statement that imples you could meet your conditions but are not doing so as a leverage for pricing. That is offside the terms of the standard contract (assuming that is what's being used). There is a term in the standard contract that requires a Buyer to use reasonable efforts to satisfy their conditions. What you posted in the OP could be seen as violating that term. You never know, the Seller could be a CP member or could come across your post via a google search about Buyers refusing to waive conditions, and you've given them ammunition... I have seen this term as the basis of a few lawsuits in my time and recommend avoiding it, even though it is normally a tough case for a Seller to win on if conditions aren't waived, the Seller's brokerage has your deposit cheque and if the Seller insists on suing you, there's a high probability that money will get tied up in a lawyer's trust account until it gets resolved.

On the other hand, I think you probably do have a legitimate reason not to waive your condo review condition and possibly your financing condition. You might refuse to waive the condo review condition on the basis that you are not comfortable with the level of owner-occupancy from a resale position. Because you now know that the level of owner-occupancy affects the willingness of a mortgage-insurer to get involved, and because you also know that a large proportion of people who might buy your condo in the future would need mortgage insurance, the valid concern is that the property is not as valuable because you may be selling to a more limited market. As far as the financing condition goes, I would say that you have an out if the condition was filled out such there were maximums put in the condition that you can't meet or if the front page was filled out properly showing less than a 20% down payment (Initial Deposit + Additional Deposits (if any) + Balance Due at Closing). If you read the condition you should see what I mean. You can fill in a maximum interest rate, maximum term, maximum amortization I believe, but I don't recall if you can put in a maximum down payment. I find a lot of times that the condition is left mostly blank except for the date. That could be interpreted as simply being able to get any financing no matter how tough the terms are, which could make it harder to not waive, since there are companies out there that will self-insure mortgages, not involving CMHC etc., but the interest rates and other terms of the mortgage are far less favourable. If the front page of the contract wasn't filled out correctly (i.e. if the deposits and balance due at closing add up to a 20% or greater down payment) then the CMHC issues would not be relevant to a refusal to waive financing at all. Luckily, it is far less likely that this was filled out incorrectly as your Realtor should have asked how much you were intending to put down and filled in the numbers accordingly.

So in short, I think you should refuse to waive both conditions, but on the basis that you are unhappy with the owner-occupancy levels and the potential impact on resale, or other legitimate issues with the condo docs, and I think you should edit your first post just to be on the safe side.


ETA: I agree with the above about renegotiating the price now rather than letting the deal die and come back with a new offer. Be up front with your concerns. It won't affect your ability to refuse to waive one way or the other IMO.

[troutman]

Originally Posted by onetwo_threefour

First, go back and edit the OP to remove any statement that imples you could meet your conditions but are not doing so as a leverage for pricing. That is offside the terms of the standard contract (assuming that is what's being used). There is a term in the standard contract that requires a Buyer to use reasonable efforts to satisfy their conditions. What you posted in the OP could be seen as violating that term..

+1

I was about to say the same thing.

[flamesrule_kipper34]

Thanks onetwo_threefour, I will definitely use your advice moving along here.

Much appreciated for everyone's input.

[onetwo_threefour]

Originally Posted by troutman

+1

I was about to say the same thing.

I knew that. If I wasn't so lazy I would have gone back to another thread and just quoted one of your "Don't discuss this on a public forum" posts.

Then my lazy post turned into a novel...

[troutman]

Originally Posted by onetwo_threefour

I knew that. If I wasn't so lazy I would have gone back to another thread and just quoted one of your "Don't discuss this on a public forum" posts.

Then my lazy post turned into a novel...

My posts are a flat fee, and you bill at an hourly rate.