If you’re looking to buy a house in today’s fast-paced real estate market, you’ve probably heard the term “subject-free offers” thrown around. Maybe your friend made one. Or maybe your agent has suggested it to help your offer stand out in a bidding war. But before you jump in, let’s pause for a reality check: waiving subjects is risky—and it can cost you big time.
What Does “Subject-Free” Mean?
In a typical real estate transaction, you make an offer to buy a home subject to certain conditions. These could include things like getting financing, completing an inspection, or reviewing legal documents. This gives you a safety net—a chance to back out of the deal if something doesn’t check out.
Now, when you make a “subject-free” offer, you’re removing that safety net entirely. The seller can accept your offer right away, but if anything goes wrong—whether it’s financing falling through, a problematic inspection, or even a last-minute issue with the property—you’re locked in. No escape. No time to double-check the details.
It might seem like a clever way to outbid other buyers, but let’s break down why this is such a dangerous move.
The Hidden Dangers of Subject-Free Offers
No Room for Due Diligence
Subjects give you time to do your homework. You can get your mortgage approved, check out the condition of the property with an inspection, and review any legal documents (like strata minutes or insurance policies). When you waive these conditions, you’re making a huge bet—one that could come back to bite you. Let’s say the house needs major repairs or the strata corporation is being sued—you won’t have any way out, and you’ll be stuck with the consequences.
The Financial Risk
One of the biggest dangers of going subject-free is the risk to your finances. If you make an offer without conditions, you have no safety net if the bank doesn’t approve your financing or if you can’t secure a loan for any reason. You’ll be forced to either come up with the money on your own or breach the contract—either of which can be incredibly costly. Losing your deposit is just the start. If the seller decides to sue you for damages or if the deal falls through and they need to relist, you could be on the hook for even more expenses, like realtor fees, legal costs, and lost sale revenue.
Inspection Issues
Skipping an inspection is another risk when waiving subjects. A house might look perfect on the surface, but you have no way of knowing if there are hidden issues like mold, structural problems, or electrical hazards. Without the inspection contingency, you’re gambling that there are no major issues—and if there are, you’re left with costly repairs.
A Binding Contract with No Way Out
When you remove all subjects, the contract becomes firm. That means you’re legally bound to go through with the purchase, regardless of what happens next. You can’t just change your mind without facing serious legal consequences. If something goes wrong—like the financing falls through, or you find out the property is worth less than you thought—you’ll be stuck with the deal unless you want to risk losing your deposit and facing a lawsuit.
Is It Worth the Risk?
In a seller’s market, it can feel like making a subject-free offer is your only shot at landing the house. Everyone’s talking about it, and your real estate agent might even encourage it to make your offer stand out. But here’s the truth: subject-free offers are a gamble.
Unless you’re absolutely sure that everything about the property checks out, it’s better to protect yourself with a few carefully chosen subjects. Remember, buying a home is likely the biggest financial decision of your life. Don’t make it harder by waiving your right to do due diligence.
What Should You Do Instead?
- Include Financing: Make sure you have time to secure your mortgage before the deal becomes binding.
- Get an Inspection: Protect yourself from hidden issues that could cost you thousands.
- Review the Fine Print: Look at strata documents, seller disclosures, and the property title to ensure there are no surprises.
The Bottom Line
In a competitive market, it’s easy to feel pressure to make a quick offer, but waiving subjects could be a huge mistake. Take your time, do your due diligence, and protect yourself. It’s tempting to think you’ll gain an edge without subjects, but in reality, you’re just exposing yourself to a world of risk. Don’t let your dream home turn into a nightmare.
If you need assistance with your contract (drafting or review), contact your local BC Notary, Krische & Co. Notaries, for advice and help.
