Once the negotiations have concluded and everyone has signed off, you enter a stage that is often referred to as pending sale. People will say, “Oh, its pending,” or “Our offer is pending” or “We are pending.” In any case, when you’re pending, it’s time to get down to business and work on “satisfying” the conditions that are written out in your offer paperwork. These are the things that have to work out in order for the sale to go through. We’ll go through the common ones.
You’ll have worked with your mortgage broker or specialist to have pre-qualified, but this is where the rubber meets the road and where your documentation gets put through the lender system. If you have a good broker, there likely won’t be a lot of surprises in this stage, but there is usually more documentation required in order for the lender to confirm that they are comfortable lending to you.
That’s not all brokers look at though, they are also looking at the property that you are buying. Remember that the lender wants to ensure that if things were to go sideways and they ended up on the hook for the house, they would reasonably be able to get their money back out of it.
So while the lender needs to qualify you as a purchaser, they also need to ensure that their investment is a good one. Often this means they will send an appraiser in (which often is at the expense of the buyer, though not always) to confirm value. We have seen approvals come in the same day; we have also seen them take a full two weeks. It really depends on the broker/specialist, the lender, the underwriter, and how busy all those pieces of the puzzle are as to how quickly things happen.
It’s vital that you get ALL the information that your broker or specialist requests as quickly as possible in case there are any surprises along the way. You’ll want to avoid running up against your condition deadline because there are no guarantees that a seller will agree to extend them.
2) Home Inspection
Regardless of if you are buying an apartment, a house, or an acreage, a home inspection is a key piece of the buying process. Not only can it be a great educational opportunity for you to learn about maintenance of the home, it is also important to make sure that there aren’t unexpected issues in the property that could equate to either large liabilities (eg. pipes leaking in an apartment condo into other suites) or expenses that you haven’t planned for but would be a big issue to handle in terms of time or money.
You should expect that there will be some maintenance things that come up in a home inspection. Realistically, if you’re buying a property, there will be maintenance. And unless it is 100% brand new, it is not reasonable to expect it to be in 100% brand new condition.
There is an opportunity to re-negotiate based on deficiencies in a home inspection, but it is a negotiation. It’s important to focus on really important items, like if you find active water issues or safety issues. Lean on your Realtor® here for advice and guidance. Often we recommend having inspections done about three days before conditions are due (at the latest) to provide time for any research or negotiation that needs to happen as a result of inspection findings.
3) Condominium Document Review
If you’re buying a condo (and we will do a whole blog set on condos later because it’s way more involved than we have room for here) you’ll need to do a full review of financials, meeting minutes, bylaws, engineer reports, and more. Your agent can do a look through of them for red flags, but ultimately, it’s your responsibility to ensure you understand what is there.
The point of this condition is to understand the potential risk for cash calls, how the property is managed, and ensure you are comfortable with both. We are seeing a trend towards professional condominium document review, which is like a forensic investigation of the condo financials or a home inspection of condo docs. This is a great option.
We also see lawyers review them sometimes, but lawyers do not usually deal with condos all the time, so make sure that if you go that route, you have someone who understands what they are looking at. And remember, you are allowed to call the condominium manager. Most condos have a professional management company and they can be a great resource for answers.
Once you have your financing approved, you are comfortable with your review of documents, and/or you are satisfied with the home inspection outcome, you can “remove” or “waive” your conditions. Essentially this means that you finalize the deal and move into being “sold” and waiting for possession day.
Next in this blog series, we talk about the stuff you may need to pay for in the home buying process.