Q. I am a first-time homebuyer and I am getting quite frustrated. Contrary to the doom and gloom of a recession I still read about in the news, I have encountered several potential purchases where there are multiple bids and I am on the losing end of the equation. What is going on?

A. There are a number of factors at play that are making your search for a new home frustrating. It is less legally oriented but your situation still bears addressing in my column.

The first is that because interest rates are so low, a host of first-time homebuyers are entering the market with huge pent up demand. They have saved their money over the past year or two and want to get into the market now. Hence the multi-bid situation. The statistics say that 2009 June transactions were up 27 per cent from June of 2008. Quite an amazing statistic in a recession.

The higher end of the market is hardly moving with some of my realtor colleagues who historically trade in larger more expensive homes, indicating that their volume is down by half or more. A potential explanation of this is that these are the people/executives who have been hardest hit by the recessionary forces and seen huge losses in net worth. They are hunkering down and waiting out the recovery.

Multiple bid situations lead to a variety of situations and can force behaviour that can lead to big problems. No one should be submitting an offer that is not conditional on house inspection (or even worse, termite inspection). If you do not address this potential problem finding issue, you may discover you have purchased a lemon for a home: A situation that first time homebuyers usually don’t have the financial resources to address.

I know the tendency if you have been burnt a couple of times in a multiple bid situation is to go in with no conditions, but you are playing with fire if you don’t make sure you have built in the necessary conditions to protect yourself.

– Jeffrey Cowan is the principal with Cowan Taylor and McGee, Barristers & Solicitors. The information in this article should not be relied upon as legal advice.