Why use a real estate agent? A buyer chose a commission rebate and later faced a difficult closing with no financing, inspection or insurance protections in their agreement. This real-life story from REMAX agent Lana Grichanik shows why using a real estate agent, setting the right offer conditions and getting professional guidance matter when buying a home.
Key Takeaways
- A buyer who chose representation based on a commission rebate ended up with an agreement of purchase and sale containing no conditions and no protections
- Conditions like financing, inspection and insurance exist to protect buyers, and waiving them without a strategic reason carries real financial risk
- Some lenders may reduce or decline financing on homes in poor condition, and without proof of insurance, a deal can fall apart days before closing
- The money saved on a rebate up front can be outweighed by the cost of a deal that does not close
Why use a real estate agent when buying a home?
A real estate agent can help reduce a homebuyer’s risk by negotiating contract terms, recommending appropriate conditions, identifying risks and coordinating financing, inspections and insurance before closing. While some buyers focus on commission rebates or discounts, an experienced agent can help prevent issues that could jeopardize the purchase entirely. The following true story shows what that protection is worth.
Can a commission rebate cost a homebuyer more in the long run?
About a year ago, a buyer reached out to REMAX agent Lana Grichanik with two requests in the same email: help me find a home, and give me back part of your commission as a rebate. Lana politely declined. She knew the value she brings to a transaction, and she did not feel the need to explain it.
The buyer moved on and found someone who would say yes.
The email that landed in the wrong inbox
Fast forward a year. An email lands in Lana’s inbox, clearly sent to her by mistake. The subject line, in all caps: URGENTLY NEED HOME INSURANCE POLICY. Attached were the listing and the agreement of purchase and sale. The deal was closing the next day.
Lana let the sender know the email had reached the wrong person. But as a professional, she couldn’t help reviewing what was in front of her. What she found is the kind of story every homebuyer weighing whether to use a real estate agent should hear before signing anything. You can watch her tell it in her own words in her original video.
What risks were hidden in the purchase agreement?
The property itself was in rough shape. Hardly livable, in Lana’s words. That matters more than most buyers realize. Depending on a property’s condition, some lenders may require repairs before approving financing, reduce the loan amount or decline financing altogether, and most require proof of insurance before releasing funds. In this case, no one had arranged home insurance, and the clock had nearly run out.
Then there was the agreement of purchase and sale. Beyond the standard form provisions, it included only two additional clauses: the number of visits the buyer could make before closing, and confirmation that the buyer would pay the full price.
That was it. No insurance condition allowing the buyer to confirm that suitable coverage was available before becoming fully committed. There was no financing condition, no inspection condition, and no additional buyer-protective clauses of any kind. Nothing in the agreement would let the buyer walk away or renegotiate if something went wrong.
Sometimes buyers strategically submit a clean offer to compete in a bidding war. That was not the case here. Lana checked, and the property had not received multiple offers. There was no competitive reason to strip out every protection.
So yes, the buyer received their discount up front. What followed, as Lana put it, were sleepless nights and a deal that was at risk of not closing at all.
Why are conditions important in a real estate offer?
Conditions are not red tape. They are the safety mechanisms built into an offer that give you a legal way out, or room to renegotiate, if a problem surfaces before closing. Conditions on a real estate offer commonly cover financing, home inspection and insurance.
What is a financing condition?
A financing condition allows a buyer to cancel a purchase agreement without penalty if they cannot obtain mortgage approval within a specified time period. Getting a mortgage pre-approval before you shop reduces the odds you’ll ever need to use it.
What is an inspection condition?
An inspection condition lets a professional assess the property’s structure and systems before you are locked in, giving you room to renegotiate or walk away if serious issues surface. A pre-offer checklist can help you spot concerns even earlier.
What is an insurance condition?
An insurance condition allows the buyer to confirm that suitable insurance coverage is available before the agreement becomes firm.
An experienced agent knows when conditions are essential and when it makes strategic sense to compete with fewer of them. That judgment call is a big part of what makes one offer stronger than another, and it should never happen by accident.
Why can home insurance derail a closing?
Most mortgage lenders require proof of acceptable home insurance before releasing mortgage funds. If a property is vacant, severely damaged or in poor condition, some insurers may decline coverage altogether. Without acceptable coverage in place, a transaction may be unable to close on time.
That is exactly the corner this buyer was backed into: shopping for a policy on a barely livable property with one day to spare, and no condition in the agreement to fall back on if the answer was no. For a full picture of what needs to happen between acceptance and keys, see what happens after your offer is accepted.
5 warning signs in a real estate transaction
A buyer should take a closer look if:
- The seller refuses reasonable conditions.
- Financing has not been confirmed.
- Home insurance has not been secured.
- The property has significant visible repair issues.
- The agreement contains few or no buyer protections.
What does a real estate agent do for buyers?
When you use a real estate agent as a buyer, it is easy to see their value as opening doors and booking showings. The real value shows up in the paperwork, the negotiation and the problems you never hear about because your agent caught them early. A real estate agent working on your behalf will:
- Structure your offer with the right conditions for the property and the market
- Flag red flags in a listing, from condition issues to financing hurdles, before you commit
- Coordinate the moving pieces between your lender, lawyer, inspector and insurer so nothing falls through the cracks at the deadline
- Negotiate on your behalf with your interests, not the seller’s, in mind
If you are weighing whether representation is worth it, our posts on what an agent does for the buyer and why you need a buyer’s agent break down the full picture, and how to make an offer on a house walks through what a well-built offer includes.
Is a buyer rebate worth the risk?
A commission rebate can look like easy money. But compare it against what was at stake in this story: a deposit potentially at risk, potential legal liability for failing to close, scrambling for insurance on a property insurers may not want to cover, closing costs already committed, and the possibility of losing the home entirely. The cheapest representation is rarely the least expensive path to your front door, and the reasons to use a real estate agent rarely show up on a receipt. When you choose an agent, you are choosing the person whose judgment stands between you and an agreement like the one Lana found in her inbox.
Frequently Asked Questions
Do I really need a real estate agent to buy a home? Legally, no. Practically, an agent helps protect you at the stages where the most money is at risk: structuring the offer, setting conditions, negotiating and coordinating closing. As this story shows, the cost of missing protections can far exceed the cost of representation.
What is a buyer’s rebate? A buyer’s rebate is when an agent returns part of their commission to the buyer. Rules vary by province. The trade-off to consider is what level of service and diligence accompanies the discount.
Can you buy a house without conditions? Yes, but doing so increases your risk. Without financing, inspection or insurance conditions, you may still be legally obligated to complete the purchase even if problems arise before closing.
What conditions should be included in a home purchase offer? Common conditions include financing approval, home inspection, insurance verification and lawyer review. The right conditions depend on the property, local market conditions and your tolerance for risk.
What happens if I can’t get home insurance before closing? Most lenders require proof of insurance before they release mortgage funds. If you cannot secure coverage in time, your financing can collapse and you may be unable to close, potentially putting your deposit and the deal at risk. An insurance condition in your offer helps protect you from this scenario.
Should I ever waive conditions on an offer? Only as a deliberate strategy in a competitive situation, with a full understanding of the risk, and ideally with an agent guiding the decision. Waiving conditions when there is no competition, as happened in this story, takes on risk with no upside.
This story reflects one real transaction. Every real estate transaction is different, and the appropriate terms of an offer depend on the property, market conditions and the buyer’s individual circumstances.
