By: Tom Bushey

We Found The House of Our Dreams Only To Find Out that it is already Conditionally Sold. Is it worth making a Backup Offer?

Tags: Buying a Home in Calgary

2020-03-02

The simple answer is: YES.

Backup offers are becoming more common and are often successful. In the last downturn of the real estate market, buyers were having a difficult time in qualifying for mortgage loans and the same thing has been happening this year. While not a huge number of deals fall apart, in difficult times they seem to double in quantity. In a short 3-month period that year, we completed 3 successful deals for our clients by making backup offers on homes that were conditionally sold.

In October of 2016, lending criteria for high-ratio mortgages substantially changed. As a result, consumers who would previously had no problem in qualifying for a mortgage loans are more frequently being turned down by lenders. As a result of this, their conditional purchases are collapsing. In March 2017, the mortgage insurance premium increased – again! As the federal government continually tries to slow down the price appreciation in the Toronto market, the qualification rules for mortgages (across the country) will probably only get more difficult.

If you had an accepted offer that was a backup to the first offer and the first offer collapses for any reason, your already accepted offer automatically becomes active and is in play! This is a great strategy to get the home of your dreams!