Category: 

In Real Estate, What is a Conditional Offer?

A conditional offer occurs in real estate when a home buyer and the seller agree on a deal that has a specific amount of time that the sale needs to be completed in for the sale to be official.
Article Details
  • Written By: Sheri Cyprus
  • Edited By: Bronwyn Harris
  • Last Modified Date: 17 June 2014
  • Copyright Protected:
    2003-2014
    Conjecture Corporation
  • Print this Article
Free Widgets for your Site/Blog
The World Health Organization classified air pollution as more dangerous to health than smoking.   more...

July 25 ,  1978 :  The world's first in-vitro fertilization baby was born.  more...

In real estate, a conditional offer is a condition of sale that is agreed upon by both the buyer and the seller. The time frame set is important when it comes to such offers because if the condition isn't met within the specified time, the agreement is void and the buyer receives the deposit back. This type of sale can be tricky, but may be a good option in some cases.

A short term conditional offer, such as to obtain approval for mortgage financing or for a home inspection, can work out well as it doesn't tie up the property for long. One that involves a long term or indefinite commitment, such as a condition based on the buyer's current property selling, may be great for the buyer, but not so great for the seller, however. The seller is still free to try to sell the home while the offer is on the property and this may be a strong incentive for the buyer to fulfill the condition.

Ad

Still, a real estate agent may not want to show a property that has a conditional offer on it. Most real estate agents instruct sellers to always have an escape clause in their counter offer, so that they don't miss out on a good deal. The escape clause allows the seller to accept another offer as long as it's not also conditional. The buyer with the condition has to meet the terms or waive them and buy the property without the condition or else cancel the agreement so that the seller can accept the other offer.

A conditional offer may work for those who need to sell their current property to buy new property, but don't feel ready to do either one first. If this is the case, advice from a knowledgeable real estate agent is a must to be sure that this method is the best choice. A buyer who insists on conditions may lose out on purchasing a great home because the seller doesn't want to consider any such offers at all.

Ad

Discuss this Article

anon273852
Post 6

We made an offer on a home with the condition that if we had a letter of approval from our bank, that it would be removed from the market. The house is recording on Monday and the sellers agent still has it listed on their website and has the whole 45 days, and in addition, the for sale sign is still in the yard. Was this a breach of the agreement?

mutsy
Post 5

@Oasis11 - I understand the conditional contract offer with regards to a home inspection, but some people not only offer this condition to buy home but they also put the conditional offer based on them getting approved for financing.

For me as a seller, I would not entertain any conditional offers based on a financing clause because it is so hard for a lot of people to get approved by a bank and this is something that should be shored up before someone looks for a home.

When I am in the market for a property, I always make sure that at the very least I am preapproved for a home so that both my real estate agent and the seller know that I am serious. This also makes the seller more likely of accepting my offer than someone who does not have their financing in place.

oasis11
Post 4

@Anon12212 - My understanding is that an unconditional offer means that there are no restrictions or conditions placed on the seller regarding the purchase offer.

You might want to consult a real estate attorney to be sure, but if the seller accepted your unconditional offer you may be stuck. I would always offer a conditional offer when purchasing real estate because of problems like this.

You need to be able to do a home inspection and make sure that your home is safe and needs no repairs because if the home does have costly repairs, it may not be worth purchasing the home.

For example, if you find that the home has mold, you are probably better off looking at another property because mold remediation not only takes time, but it is expensive and it is something that the seller would have to fix.

bruceruth
Post 3

A conditional offer has been made with no deposit paid, are we obliged to purchase this property when, and if our house sells or are we able to purchase an alternative property.

anon12212
Post 1

can i get out of a unconditional home deposit, have just discovered house needs restumping which i dont have the funds to repair.

Post your comments

Post Anonymously

Login

username
password
forgot password?

Register

username
password
confirm
email