Writing No Condition Offers

Vancouver Real Estate Market

The first time that I posted this article was in 2017. Even 3 years before this initial posting, you could use the same narrative virtually word for word to describe what was going on in Metro Vancouver’s housing market.

This is what I wrote originally in 2017: For quite some time now there has been a very limited supply of properties on the market and most Realtors that I speak with on a regular basis are starting to have buyers lined up and waiting. There are so few  properties to show these buyers, often times several groups working with the same agent are interested in the same property. We are beginning to see similar trends that we saw a year ago, which was 2016, where we saw multiple offers and properties going for several thousand over the asking price.

For years people have predicted a housing bubble and one of the biggest reasons has been affordability. The average household income is highly out of line with the average cost of a home in the lower mainland. This trend continued from the time of this writing originally in 2017 all the way up until the start of 2022.

There have been numerous articles explaining, how despite people screaming bubble at the top of their lungs for years, why ‘there is no bubble’, This article by a colleague is a good one.

I wrote a piece last year for 604now.com about the price of a tear down in Vancouver which has since been taken down it seems. The gist of the article is about the restrictions and the lack of supply of livable land in our city and province. It turns out the Pacific Ocean, US border, North Shore mountains, and the Agricultural Land Reservce (ALR) all remain intact.

Simply put, there is no expanded land supply in the Lower Mainland. Which means naturally, no expanded supply of properties to market. Migration and immigration numbers remain strong, largely due to stable employment numbers and – the recent sub-zero temperatures not withstanding – a pretty awesome climate overall.

So, we have

Strong demand

Strong employment numbers

Limited Supply

What will this lead to in the ensuing months of 2017?

Well I can tell you already from experience over the last week and a bit that it will most likely lead to several buyers feeling immense pressure to write subject-free offers. Perhaps the single worst idea in real estate.

I’ve said this before and I’ll say it again- if the BC government truly wanted to do something to cool the market they would implement the same policy for used property transactions as we have on sales (and pre-sales) of brand new properties –a mandatory 7-day rescission period – a forced time of cooling-off during which one can get their finances in order, perform a property inspection, etc.

Think about this: In BC one cannot write a subject-free offer on a new build, period. And so there are no competitive bidding wars (lineups for three days in advance, yes, but risky binding contracts, no).

In other words, the one type of property that presents the least risk – a brand new build subject to current building standards, fully inspected by the city, and covered under warranty… this is the one you cannot write ‘subject-free’ on.

Yet our policymakers think it is A-OK to walk across the street and write a blind-bid offer, perhaps paying 10% more than the next-closest offer, on a 100+ year-old house containing asbestos tiles, poly B piping, vermiculite insulation, knob-and-tube wiring, unauthorized renovations, work not done to code, etc.

Yeah, No Problem. Go right ahead.

If you are thinking that the industry loves this subject-free, rush closing date environment, you would be incorrect. Realtors, appraisers, lawyers, notaries, bankers and Brokers alike would all be quite happy to see some form of legislation implemented to slow buyers, and perhaps slow the market down in general.

Removing the mechanism that creates this market madness would be applauded by all corners of the real estate industry.

Many people are still under the impression that a pre-approval means something. I have posted this before, a pre-approval is not worth the paper it is printed on, and once again this coming spring several buyers will succumb to the pressure to write subject-free offers based on a misunderstanding of how little validity a ‘pre-approval’ has. Hard lessons will be learned.

There is only one time that a buyer should even consider writing a subject-free offer, and that is when they have the capacity to close the purchase with cash. Otherwise, always insert into an offer a ‘subject to the buyer obtaining satisfactory financing’ conditions. Cover yourself.

Get ready for another rocking and raging spring market. Brace Yourselves.


Mortgage Traps

Be wary of banks that offer you an extremely low initial rate with a significant increase a year later. For a first time home buyer in Canada, the complexities of mortgages can be very overwhelming, and it can be easy to get locked into a mortgage without getting the best rate possible.

One of These Three Things Have to Go Wrong For Lower Rates

There are 3 things that will dictate the direction of Mortgage Rates. One of them has to happen in order for rates to fall further – And one of them is Bad! If you are pulling for mortgage rates to go down here are 3 things that you should be paying attention to…

Canada Mortgage Rates- a Handy Guide to cibc mortgage rates

The Rate Tango: Canada Mortgage Rates Variable vs Cibc Mortgage Rates Fixed. Become an expert on Canadian Mortgage Rates with our Handy Guide. Many first time home buyers are wondering whether they should take advantage of this low rate or if they should lock in the more secure fixed rate mortgages.

Is This The End Of 5% down payment?

CMHC is the government body that insures mortgages. To put it in the simplest of terms, when CMHC insures a mortgage, it means the bank essentially does not have any risk when it issues the loan. Of course there’s some risk carried by the bank but the Government…

Mortgage Penalties In the Media Again

A self-employed, single mother of a 12 year old boy, also taking care of her elderly mother, made CBC headlines for having to pay a $30,000 early termination penalty on her mortgage, when she was forced to sell her house in April, due to the COVID-19 pandemic.

Daily Corona Virus Mortgage Updates

Canada’s lowest nationally available conventional variable rate is just nine basis points cheaper than a comparable 5-year fixed rate. That minuscule “fixed-variable” spread is now 80% narrower than its 10-year average. The market is no longer compensating new borrowers for the risk of a floating-rate mortgage.

CMHC Rule Changes

Traditionally – if the waters are rough, you do whatever you can to not rock the boat. CMHC today however has rocked the boat. The housing market has weakened over the last few months, due to the pandemic, but Canada’s largest default insurer is making it tougher for people to get a mortgage…

How to Get Financing during the COVID Pandemic

Most of you are going to be very angry at this post because it may seem like I am actually encouraging people to get out there and buy properties.As a matter of fact, anyone who calls me asking for financing options, the first question I ask them is: “Are you really going to be buying a property in the next 3 months?”

Variable Rate Update

During the start of the lockdown due to the COVID crisis, banks hiked their variable rates discounts to prime – 0%. At the time, we predicted that variable-rate discounts will improve significantly once again. Well, very slowly now, we are starting to see this happen.

Coronavirus related to your mortgage

Believe it or not, the coronavirus can have an impact on your mortgage and your interest rate in particular. Listen below to find out exactly how and why.

If you would like more information or a free consultation contact Aleem below, and as a Certified Mortgage Specialist let me help you get the home of your dreams. Great Mortgages, Made Simple
Aleem Peermohamed - Mortgage Broker BC


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