No Condition of Financing Nightmare

Published: June 13, 2014 Last updated: January 6, 2021 at 7:43 am

Stress of Bidding Wars Drives Homebuyers to Abandon Safety of Financing Condition

Multi-offer situations (bidding wars) typically rear their ugly head in a heated market, when a desirable home in a good neighbourhood is deliberately listed at a lower-than-market-value price.

This can lead to realtors rushing their buying clients to the house to make a snap decision before the appointed “deadline date” for submitting offers.

When things go well for the seller, the result can be a terrific offer, with few, if any conditions, at a price somewhat above the asking price. The process is fast, efficient, and works well for the sellers and their realtor.

As a buyer, if you get involved in one of these situations, you may well be taken out of your comfort zone if you want to win the “auction”. Don’t get emotionally attached beyond reason.


You can generally forget about negotiating or bartering for any special concessions. Even a home inspection clause can “kill your offer.” (see a recent article I wrote on that very subject)

Your closing date will often be chosen to be in the seller’s best interests, and not necessarily your own.

To be taken seriously, your deposit should be very healthy. In the GTA, this could easily mean as much as 5% or more of the purchase price. (For example, $50,000 on a $1,000,000 home!)

No Condition of Financing

Most discomfiting for me, as someone who arranges mortgages, is when the buyer feels compelled not to include a condition of financing in the offer.

Normally, most offer to purchase include a condition whereby the buyer has five business days to secure mortgage financing.

If you do not put this clause in your offer, you had better be “sure” you will qualify for the mortgage you need – otherwise, you will have serious problems.

Can you ever be 100% sure? No, unless you have the full purchase price already available to you – which is not the case for most people.

You really should speak to your mortgage specialist to gauge their opinion on how well qualified you are – perhaps even do a full “Pre-Approval” application, but still this is not a guarantee.

A Recent Case History

Two weeks ago a couple came in despair to our office, having made an offer to purchase a home with zero conditions attached. They had excellent credit scores, a respectable employment history, and they had their down payment lined up. What could go wrong?

Well it turned out the property was judged to be worth $40,000 less than they had offered during the multi-offer process, so the deal as submitted did not work for their mortgage lender, and they had been turned down for a mortgage.

With a $25,000 deposit already committed here, you can understand how they were freaking out.

Fortunately, we were able to come up with a solution that meant they could secure mortgage financing and close their purchase – but not before they had grown a few grey hairs!

So the lesson here is to be very careful in these multi-offer situations. You can get burned very badly if things don’t work out as you envisioned.

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