How a 5-Day Financing Condition Can Protect You When Buying a Home

In a competitive real estate market, it’s tempting to go in firm with no conditions to win a bidding war. However, I’m here to share some old-school advice that’s more relevant than ever: seriously consider a five-day financing condition.

Why a Financing Condition Matters

A financing condition gives you a window (typically five days) to secure mortgage approval and, importantly, to get the property appraised. If the appraisal comes in lower than the purchase price, having this condition gives you time to reassess your options and back out without being legally bound to the deal.

The Risk of Going Subject Free

While it might seem appealing to waive conditions in a hot market, skipping the financing condition is risky, especially with appraisals often coming in below the agreed price. If the appraisal is lower, you might have to come up with more cash or lose your deposit — both situations are avoidable with a financing condition.

When a Firm Offer Makes Sense

If you have extra funds and are comfortable with the possibility of a low appraisal, a firm offer may make sense. But, for most buyers, the five-day window provides valuable protection against unexpected costs and risks.

Conclusion

While the market may pressure you to act fast, always consider the benefits of a five-day financing condition. It’s your safety net, offering time to ensure your appraisal matches the purchase price and to make sure you’re not financially overcommitted.

Buying a home is a huge commitment — don’t rush into it without the right protections in place. If you need advice, I’m here to help!