If you’re in the process of buying a home or have just bought your first property, you have more than likely come across the term ‘conditional offer’. Although this is a common term when it comes to purchasing a home, most people are not aware of what it is, including the responsibilities and requirements that come along with it.
Conditional Offers Explained
A conditional offer means that the purchaser offers to buy the property if conditions that were outlined in the offer of purchase were met within the specified timeframe. The buyer and seller must agree on these conditions and if they are not met within the timeframe (typically 3-7 days) the offer is considered void and the deposit is returned. The seller can still show the home to other potential buyers during this time, in the case that the conditions for the offer are not met and the offer then falls through.
Commonly Found Conditions in a Conditional Offer:
Financing is one of the most common conditions in a conditional offer. What this means is that the buyer must secure financing for the home purchase to happen. Although this seems easy and straightforward, it is important to keep in mind that a lender may change the amount you were pre-approved for, based on the home appraisal. It is important to ask the lender about the appraisal process when you are considering a lender. Once a conditional offer is placed it is important to note that the buyer must take the required steps and act ‘in good faith’ to try and secure financing.
Another common condition is a home inspection. This condition helps the buyer cancel or withdraw the offer based on the results of a home inspection. Although it may seem straight forward there are requirements and obligations that must be met. The home inspection must be complete and done by a qualified professional.
Sale of a Current Home
Making your offer to purchase conditional on the sale of your current home is also a commonly found condition. It is also necessary to include if you will be using the money you receive from the sale of your current home towards the purchase of the new property. You will have to keep a reasonable timeframe in mind, in which your home should be sold by, to stay competitive and help to ensure that your conditional offer is accepted.