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What Is a Conditional Offer?
A conditional offer is an offer on a property that is contingent on certain conditions being met. These conditions can be anything from the buyer obtaining financing to the seller completing repairs on the property.
The most common conditions (also known as subjects) are financing, a home inspection, and the sale of the buyer’s current home.
How Is It Used in Real Estate?
The term conditional offer is commonly used when an initial offer is submitted to purchase real estate.
When searching for a home, or when searching for buyers of your property, you typically won’t see this term. Where it comes up in almost every real estate deal is when an offer has been made.
As a buyer, you’d work with your real estate agent to list conditions on your offer in the right market. As a seller, you’d see these conditions when you receive offers. It’s a common term and common practice to have conditions in an offerespecially in a buyer’s market.
Example
Mateo sees his perfect home for sale. He’s been in the real estate market for a while and wants to submit an offer.
He works with his real estate agent to draft up a competitive offer. Since it’s a buyer’s market, Mateo’s agent recommends to add important conditions to the offera condition for financing and a condition for inspection.
This conditional offer is then submitted to the sellers, where they will review and potentially accept it with the conditions listed.
Frequently Asked Questions
How long do offer conditions last?
Conditions can last as little as 24 hours or as long as several weeks, depending on the situation of the home and the nature of the buyer’s offer. Conditions are waived when the buyer’s condition details are met.
The seller wants to have as short of a conditional window as possible, because they are not allowed to accept other offers without severe penalty while conditions are reviewed.
To the contrary, the buyer wants longer conditional offer timeframes to allow for a stress-free process when dealing with inspections, bankers, etc.
Are conditions always used in real estate offers?
Conditions are often included in real estate offers in Canada, but they are not always used. Conditions are useful in making the sale contingent on certain conditions being metsuch as the buyer obtaining financing or the property being inspected and deemed satisfactory.
While including conditions in an offer can protect the buyer’s interests, it may also make the offer less attractive to the seller and less likely to be accepted.
During a seller’s market,it’s not uncommon to see offers in all cash and with no conditions in an attempt to be the most competitive offer amongst others.
However, during a buyer’s market, there are almost always conditions on the offer as buyers have the advantage since there is less competition.
