Unfortunately we’ve had the displeasure of seeing situations like this before. Picture this scenario: You’re a salaried, full-time employee with many years on the job, a good down payment, and excellent credit. By all means, you SHOULD qualify with no problem! In fact, you’ve even taken the proper steps to get pre-approved in advance.
You’ve found it. The perfect place. The steal of a deal. The house of all houses…and you know it’s too good to be true. The competition is fierce. Your Realtor indicates to you that there will be multiple bidders and this place won’t last long.
You make the offer. The unconditional offer. No inspection. No financing condition. No problem. You include a big deposit just so they know you’re serious.
The offer is accepted! All rejoice! You just bought a house.
Then it happens. The lender is concerned about the property, and CMHC isn’t sure about the value. They ask for an appraisal and maybe even an inspection. Multiple deficiencies show up and they won’t insure the property. Your financing can’t go through. The property is radioactive to lenders and they want nothing to do with it.
Unfortunately you have no choice but to back out. You’ve lost your deposit. OUCH. You might get sued by the seller. BIG ouch.
Like I said, we’ve seen this before. We’re not Realtors, but when we have a chance to advise the clients, we always encourage them to have conditions on their offer, or at least advise them of the risks. Even the strongest clients can get burned. In fact, it’s often not the borrower, but rather, the property that can cause a deal to fall apart.
If you don’t think it can happen to you, CTV has a story of a young woman who learned the hard way about the risks of buying a home with an unconditional offer .
If you want to know more, feel free to call one of our Alberta Mortgage Specialists to discuss your options.