Residential markets always fluctuate and historically are cyclical. Accordingly, it is crucial to understand the market at any given time and adapt strategically. The successful realtors that we work with seem to do this all of the time, which is why they are successful in all market conditions. Successful realtors do not rely on luck or wait for market conditions to become more favourable. In fact, they help drive the market in every economy by accepting the current conditions and anticipating realistic eventual changes as opposed to hoping for utopian conditions.

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The recent and current residential real estate market has more properties available for sale than Buyers willing to pull the trigger on a purchase transaction. That doesn’t mean that there are not a lot of potential Buyers out there that really want to make a move. The issue is that there has been too much uncertainty in the economy and as a result many potential Buyers have been on the sidelines waiting for certain economic conditions to improve. Of particular concern for some Buyers is the uncertainty of the timing of selling their current home and the potential sale price.

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The successful realtors that we work with are creatively navigating their clients through these concerns by having their clients consider buying first and then selling. Buying first permits the client to take advantage of the “Buyer’s Market” conditions in terms of supply choice and price opportunities. The risk of buying first is then mitigated by including a condition in the Agreement of Purchase and Sale (APS) whereby the Buyer has a period of time to sell its current property before firming up the purchase transaction. This type of a Buyer’s condition would never be acceptable to a Seller in a market of multi-offered bids whereby the negotiations in an APS were basically limited to the purchase price, the deposit, and the completion date.  However, in the current market Sellers can be convinced to not summarily dismiss any offer as there might not be another offer for a considerable amount of time. So why not consider accepting an APS conditional upon the Buyer selling the Buyer’s current property if all of the other goals of the Seller are met.

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In fact, the Seller could further mitigate the Seller’s risk of accepting such a Buyer’s condition by adding an “escape clause” to the APS. An “escape clause” would permit the Seller to have the right to continue to offer the property for sale, and in the event the Seller receives another satisfactory offer the Seller so notifies the Buyer who then has a limited time to either waive the Buyer’s condition or terminate the transaction. In this scenario both the Buyer and the Seller have opportunities to achieve their respective goals while mitigating their respective risks.

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Our law firm has been assisting many realtors with APS drafting and using these types of strategies, and we anticipate continuing to do so until the market conditions inevitably shift again to create new challenges.  Please do not hesitate to reach out to us for assistance.

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