Offer conditions – which to keep and which to drop

A condition is a way out that you write into your offer. If the thing you named doesn't check out inside the window you named, you walk away and your deposit comes back. Drop a condition and your offer looks better to the seller, but now you're the one carrying the risk instead of them. Both of those are true at the same time, and that's why conditions are the first thing people fight over in a competitive offer.

Three of them matter for most purchases around the GTA. I'll go through what each one actually protects you from, and what it really costs to give it up.

Financing – the gap between pre-approved and approved

A pre-approval is the lender guessing at what you can afford. A real mortgage commitment is the lender deciding about you and the specific house, and the house can be the thing that kills it. The one I see go wrong most is the appraisal gap. You offer $850,000 on offer night, the lender sends an appraiser who values the place at $810,000, and the bank will only lend against that lower number. That $40,000 gap is suddenly your problem, in cash, on top of the down payment you already planned for.

A financing condition, usually three to five business days, gives you time to confirm the real commitment before the deal goes firm. Waive it and you're carrying that appraisal risk yourself. If you're going to waive it, do it with a real cushion behind you: a budget with room above your offer, and enough cash set aside to cover a gap. "My mortgage broker said it'll be fine" is not a cushion.

Inspection – a few hundred dollars against six figures

A home inspection costs a few hundred dollars and takes a morning. What you get for it is a professional going through the roof, foundation, wiring, plumbing, and heating and cooling, looking for the things that change what the house is worth rather than the things that just add to your weekend to-do list. Knob-and-tube wiring your insurer won't like. Water in the basement. A crack in the foundation that isn't just cosmetic.

When you're competing, the move is to inspect beforeoffer night instead of after. A pre-offer inspection costs the same few hundred dollars, and it lets you bid with no conditions but your eyes open. You might pay for an inspection on a house you don't end up winning. That's the honest cost of competing without flying blind. Some listings come with an inspection the seller paid for. Read it, but remember who was writing that inspector's cheque. It's a place to start, not a replacement for your own.

Status certificate – condos only, and the one people skip

The unit itself can be perfect while the corporation that runs the building is quietly in financial trouble. The status certificate is the package the corporation has to hand over: the budget, the reserve fund, insurance, any lawsuits, any owners behind on their fees. Having a lawyer read it is how you catch the things a showing never will. A reserve fund that's too thin for a building that age. A special assessment they're already talking about for the garage. A lawsuit that every owner is going to end up paying for.

The corporation gets ten days to produce the certificate once you ask, and that's the whole problem with keeping this as a condition in a competitive offer. Offer night isn't going to wait ten days. So again, the fix is doing it early. If the listing agent already has a recent certificate on hand, get your lawyer to read it beforeyou make the offer. An hour of a lawyer's time to head off a special assessment in the tens of thousands is about the cheapest protection you'll ever buy.

How to think about dropping any of them

• Name the risk you're taking on, in dollars. "If the appraisal comes in $50,000 light, I cover it out of here." If there's no "here," you can't afford to waive it.
• Do the homework earlier instead of skipping it. Inspect before the offer, have the certificate reviewed before the offer, use a lender who has actually seen the listing. You can get most of what a condition protects if you start early enough.
• Decide before things get heated.Which conditions you'll keep should be settled calmly ahead of time and written down, not argued with yourself at 9 p.m. on offer night. My clients sort this out days earlier, on paper, along with their walk-away triggers.

If you're about to compete for a place and you're trying to work out which conditions you can safely drop right now, ask me. The honest answer moves month to month, and it changes with the price range too.