Nanaimo Real Estate Information and News

The vast majority of people who are looking to buy Nanaimo real estate inevitably have a home that they’ll need to sell when they buy.  This leads to two major phobias by these home owners: buying a home and then not being able to sell your home, thus being stuck with two homes and, the converse, selling your home and not being able to find a new home, ending up essentially homeless.

The real estate industry for years has been sympathetic to this situation and has created a form called a “Time Clause”.  This allows buyers to make an offer on a home that is conditional to the sale of their home.  While this alleviated a lot of fear for buyers it has created a new, hidden issue that many people using the Time Clause are unaware of.

Essentially, when a buyer now makes an offer of a new home using a time clause it severely weakens their offer.  Because, typically, an offer is not for full price the buyer will be asking for some amount of a discount off the listing price.  Not only are they asking for this discount, they are also asking the seller to take a risk that the buyers’ home will even sell at all.  A seller will often view this type of offer as more of a “hypothetical” offer because it is only a true offer IF the buyer is able to sell his home.  Traditionally they will take a risk on this but only if the buyer offers a very strong price and in my experience a buyer and seller will settle on a much higher price than they would if the offer was not subject to the sale of a home.

You’re probably saying “Ok Matt. But I’d be a shrewd negotiator and make them take my lower offer!”  This may be the case and you could potentially agree to a favorable price but there is NO WAY ON EARTH that putting subject to the sale of your house doesn’t cost you some amount of money.  As immeasurable as it is, it costs you!  And it’s not even the biggest cost!

So now a buyer gets their next dream under contract and then they have to SELL their home.  An average home in Nanaimo takes around 60 days to sell in today’s market.  It would, therefore, close in between 90 and 120 days, again, on average.  Is John Q. Seller going to wait 120 days for you to sell your home?  The answer? NO!  He needs to get his home sold fast.  Like, 30 days fast.  And, if any of you are in retail, you know that the only sure fire way to get something sold fast is … to discount it.  The buyer needs to price his home at or even slightly below market value to ensure that it sells fast enough to satisfy your time clause offer.  In my experience, this means 3-7% lower than we would usually list and probably costs them around 5% of the sale price to get it sold fast.  On a $300,000 home, that’s %15,000!

So if we add up the money the buyer leaves on the table from their purchase and the certain loss of money from their sale it could, by very conservative estimates cost him $20,000.

Is there a way to avoid losing this money?  Of course there is!  We always recommend to our clients that they list their home before they do anything.  It’s usually important for them to know what they’ll net from the sale of their home before they know what they can afford to spend on their new home.  We can look at other homes during the course of the sale to make sure they don’t miss anything and we almost always make the timing work out perfectly.

If you’d like to more information on selling your Nananimo home, feel free to comment below or email me at matt@mattanddoug.com.

Take Care,

Matt.