A subject-free offer is precisely what it sounds like, making your offer without any “subject to’s” when buying a home.
A subject-free offer is often called a “cash offer” because it’s similar to paying cash. However, a true cash offer using physical dollar bills is unlikely to see in Metro Vancouver. Instead, purchasing a home using money in the bank instead of a mortgage is the best description for a cash offer. At the same time, most homebuyers need a mortgage and a relevant condition in their offer for this.
Even if you have enough to buy a home without a mortgage, you might not want to go subject-free. So you’d be wise to include some subjects for your peace of mind, such as a home inspector and insurance approval. On the other hand, suppose you’re trying to make your offer as good as cash by offering subject-free, but you do need a mortgage. In that case, you need all your mortgage pre-approval and final approval before making the offer.
If you’re considering buying a home subject-free, it’s best to do your due diligence beforehand. Adding subjects gives you time to do your due diligence after your offer is accepted. If the property doesn’t meet the conditional criteria, you can collapse the offer and walk away. As a buyer without subjects or conditions, you can’t rely on due diligence if you need to collapse the sale.
Without subjects in your offer, by law in BC, you’ll have a three-day recession period or seven days for pre-sales/new construction. While rescission does not replace subjects and due diligence, it still protects you. You’ll have three business days to change your mind about the purchase and walk away. However, using the rescission, you’ll be on the hood to pay the seller a rescission fee of .25%.
Subject-free offers are more appealing to sellers because there’s a better chance the sale will close with fewer contingencies. Making a cash offer is a solid negotiating tactic to edge out the competition or get a better deal. In a bidding war, you can feel pressured to make your offer unconditional and subject-free to be competitive.
