It’s no secret that in today’s hot Vancouver real estate market sellers hold the upper hand, with more people wanting to buy homes than sell them.
If you’re selling a home in Vancouver that’s all well and good, but what people selling their house in BC need to keep an eye out for is buyers who tie up a property and then decide to cancel the real estate purchase contract.
Sometimes your buyer may be legitimately interested in your property, but for one reason or another isn’t able to complete the transaction.
When a buyer cancels the contract to buy your home, you get hurt because your house has been tied up and essentially off of the market. Prospects who were seriously interested in buying your home have looked elsewhere, figuring that yours was already a done deal and just waiting to close escrow.
Think that just because they’ve signed a contract it can’t be canceled? Think again. Here are three ways a home buyer in Vancouver can use perfectly legitimate contingency clauses or claims to get out of a purchase contract and what the seller can do to mitigate the risk of the real estate contract being canceled by the buyer:
When a buyer cancels the contract to buy your home, you get hurt because your house has been tied up and essentially off of the market.
This is the area of the contract that you as the seller have the most control over, so use it to your advantage by not giving your buyer an excuse to cancel the purchase contract if they discover an unexpected problem with your home.
Let’s face it, all homes have their quirks, especially some of the older ones around Vancouver. You’ve actually lived in the house and know more about it than anyone else, so don’t be afraid to tell your buyer what you know about things that don’t work quite right, or even items that you suspect may need to be repaired.
Almost all buyers will conduct property inspections as part of their due diligence and they will quickly discover any items that need to be repaired anyway. If they find something that they think you should have been aware of, such as an obvious roof leak or a problem with the furnace, they may think you’re not being honest with them and wonder what else there is that you’re not telling them about. This can lead to a situation where they change their mind on the grounds that you didn’t disclose accurate information.
Your real estate lawyer, such as KBL Law, can give you legal advice to help you minimize this kind of risk, as well as help ensure that your contract closes this loophole. Keep in mind that in BC a Notary Public is not permitted to give you legal advice.
Before putting your home in Vancouver up for sale, have it professionally inspected.
This is the best way to avoid having the buyer discover things about your home when they do their own inspection, things that they may think you should have known but didn’t tell them about.
By being proactive you’ll be able to correct any items ahead of time, or if it’s something that you don’t have the funds to fix, to let potential buyers know of right up front so that they’re aware of what they are getting into.
Loan Application, Qualification & Approval
A financing contingency in the real estate purchase contract simply means that if your buyer can’t get a loan, the deal is off. This is the one clause that you as the seller have the least control over, and also the one that can catch you completely off guard if you’re not careful.
So how do you protect yourself from the unpleasant surprise of being told at the last minute that your buyer isn’t able to qualify for their loan to buy your house?
Rather than depending on the buyer to keep you updated on their financing, you could go straight to their lender for status reports. The obstacle you’ll run into is that the lender probably won’t speak with you because you’re not a party to the loan.
To overcome this objection right from the start, have your Vancouver real estate attorney draft language into your contract stating that the buyer authorizes the lender to discuss the status of the loan with the buyer. KBL’s Karen Bresler has been handling real estate transactions since the days Vancouver real estate was actually affordable, and can help you write the appropriate language into your contract.