Real estate seems to get more complex as the market evolves. The ever-changing landscape has a way of keeping us all on our toes, whether buying or selling a home. 

If there’s a big move coming up, it often helps to get back to the basics. A deeper understanding of the offer process can streamline the transition and make your journey less stressful. In this post, we’ll talk all about conditional offers, what they mean, and how to handle them. 

Want the latest facts when it comes to Midtown Real Estate? Subscribe to our newsletter for up-to-date statistics, tips, and early access to our listings right here. 

Conditional Offer: Meaning

Just as it sounds, a conditional offer means that a buyer agrees to buy a house, but only if certain terms are met. If any of the stated contingencies fall through before the conditional period, the transaction is null and void and the buyer (usually) gets their deposit back. 

  • Simply put, buyers love conditional offers because they give them an out if the house isn’t what it seems, or they can’t get financing or sell their existing home on time.
  • Sellers tend to dislike conditional offers because they add uncertainty to the transaction, which can make it hard to plan their next steps. 

Since conditional offers appeal more to buyers, they tend to be more common during slow markets with plenty of listings and little competition. When houses are in high demand but scarce supply, firm offers become the norm. 

Are you preparing for a home sale? The posts below will set you up for success:

How Often Do Conditional Sales Fall Through?

As a seller, receiving a conditional offer means your house is sold – maybe. It’s a first step, but not very reassuring. There’s always the remote possibility of receiving that last-minute phone call that the deal is off. 

How often it happens depends on so many factors, such as the market, the buyer, and the types of conditions. All you can do is focus on the aspects of the transaction that are within your control. 

You can maintain your home and make repairs regularly so it passes an inspection. While you can’t control someone else’s finances or ability to sell their own property, you can work with an experienced real estate agent who vets each buyer carefully before considering their offer. And of course, you can set a compelling yet fair price and showcase your home in the best possible light, which could result in multiple offers to choose from. 

How to Beat a Conditional Offer as a Seller

Because most sellers want certainty, it makes sense to encourage unconditional offers whenever possible. Think of the most common fears a buyer may have. With a little creativity and strategizing, you can find ways to alleviate their anxieties without jeopardizing your own future. For example:

  • A buyer is worried that the house has hidden problems lurking under its pristine surface. Arranging for a pre-listing inspection puts many of these worries to rest. 
  • A buyer may also have concerns about whether they will qualify for financing or be able to sell their existing home on time. You can’t fix the buyer’s situation, but you can protect your own interests. Their real estate agent may suggest a mortgage pre-approval or exploring the possibility of bridge financing. 

If unconditional offers are unavoidable, you still have options. You might try to negotiate a shorter timeframe to meet any conditions or include an escape clause that allows you to entertain other offers. 

Financing Condition and Other Contingencies

Technically speaking, a buyer can place as many conditions as they want. However, if they’re working with a knowledgeable agent, they will try to keep them to a minimum. 

A financing condition is one of the most common, especially when banks are more restrictive with their lending qualifications. This allows the buyer to back out of the deal if they can’t get as much funding as they’d anticipated. 

Home inspection conditions can happen even in a busy seller’s market because no one wants to close on a house only to discover a slew of unexpected problems shortly afterward. 

When the market favours buyers, other conditions can pop up more often, such as the condition of the sale of an existing home, appraisal, status certificate review (for condos), and title search. 

Buyers should understand that too many conditions can hurt your chances of a seller accepting the offer. A favourable market helps, but you still want to avoid any unnecessary complications. If ordering a home inspection or getting pre-approved in advance allows for a cleaner offer, the transaction is typically smoother for everyone. 

When selling a home, you can avoid many problems by conducting a pre-listing inspection and appraisal in advance. Even if a buyer places a conditional offer, it will be easier to meet all of the terms when you have done your due diligence beforehand. 

Is there a home purchase around the corner? The posts below can help with your search:

How Long Does a Conditional Offer Last?

The duration of a conditional offer is not set and is entirely negotiable between the buyer and seller. Buyers can push for more time and sellers can argue for less. Regardless, five business days is usually standard for conditions such as a home inspection or financing. 

The condition of sale of the buyer’s existing home is usually longer, but is also negotiable. If more time is needed to fulfill a condition, the buyer and seller must both agree to an extension, which is a written amendment to the original Agreement of Purchase and Sale.

The back and forth can be nerve-wracking for everyone. Just remember that neither party wants the deal to fall through. Chances are, they’re counting on a successful transaction just as much as you are. 

These finer nuances illustrate the value of working with a skilled real estate agent who can navigate any market. Successful negotiations give you the best possible outcome, whether you’re the one submitting or considering a home offer.

Do you want customized advice before your next move? Our Midtown Toronto real estate team is here for you. Connect with us today at david@batorigroup.com, bobby@batorigroup.com or call (416) 485-7575 to learn more.