What is an Offer that is Subject to Financing?
This is an Offer to buy a property that is “Subject To” or conditional upon the Buyer getting a mortgage within a set period of time, usually one week. In plain language, the Buyer and Seller agree to give the Buyer a week to get a mortgage and if the Buyer cannot get a mortgage in that time, the Buyer can walk away from the deal with nothing lost.
Why do we make offers Subject to Financing?
Safety! If a Buyer presents an offer to a Seller without a Subject to Financing clause (like with a Subject Free Offer) and the Buyer can’t get a mortgage, the Buyer will have to pay th e entire purchase price in CASH! I don’t know too many people who have several hundred thousand dollars in cash laying about to buy property, so not having a Subject to Financing may put a Buyer in a tight spot involving very expensive lawyers fees…
How do we make an Offer Subject to Financing?
If you’re going to buy property, hire a professional Realtor to help. They should have standard contracts with a Subject to for about every single situation that you may come across and will undoubtedly be able to help you prepare an Offer Subject to Financing.
Safety First! When in doubt use a Subject to Financing Clause!