We are going to cover subject-free offers in a low inventory market, risks, benefits, and the new rescission period in BC.

Risks of subject-free offers in a competitive real estate market

• Subject-free offers remove conditions on a purchase, making it more competitive.
• Low inventory and high demand are fuelling bidding wars, leading to more subject-free offers.

Understanding the new home rescission period

• Home rescission period is a three-day window for subject-free offers with a penalty of 0.25% of the purchase price if the buyer pulls out before the period ends.
• The home rescission period applies to residential properties and excludes commercial properties. Buyers with less than 20% down payment and insured mortgages should avoid subject-free offers.

Avoid going subject-free while buying a home

• Going subject-free is risky as the insurer could decline the file, leaving no other option for financing.
• Understand the worst-case scenario and its impact before making a decision.

💡 Knowing worst case scenario is important before going subject-free

• Consider backup options like parents with HELOC or co-signers.
• Stratified properties can be a big concern for lenders, extra preparation is needed.

🔎 Identifying property issues upfront is crucial

• Property disclosure statements can reveal potential issues.
• Non-conforming properties, non-permitted renovations, and previous grow-ups can cause financing issues.

Working with a professional broker is important for risk mitigation in real estate transactions.

• Brokers actively work through different scenarios and have access to multiple lenders to find solutions.
• Self-employed clients with income challenges should consider alternative lending options for risk mitigation.

🏦 Banks prefer automated pre-approvals to save costs

• Underwriters are expensive and banks don't want to pay for deals that may not go through.
• Mortgage brokers provide more options and risk mitigation for buyers.

💡 When going subject-free, ensure you have help to mitigate risk

• Consider putting an extra 50-200k down or having family co-sign.
• Ensure you have a clause in the contract to access the property after the recision period for due diligence and financing.