By Merisa Gomez-Adams for Realtor.ca



For most people, buying a home will likely be the most significant investment of their lives. With the emotional and financial aspects tied to purchasing and/or selling a home, it’s important to complete all due diligence to ensure your investment is protected.


 

This article will explore what conditions are, typical conditions you’ll encounter during the offer process, how they can affect the sale, and what happens if they’re not met. 






 

What is a conditional offer and who benefits from one?
 

Simply put, “a conditional offer is when a buyer makes an offer on a property that contains conditions,” explains Duncan McDougald, REALTOR® with RE/MAX Executives Realty in Whitemouth, Manitoba. “Conditions are put in place to protect the buyer or seller as both have the right to include them in an offer to purchase. Realistically, conditions can be anything, as long as both parties agree to them. As a REALTOR®, it’s important to know what conditions to recommend to buyers and sellers in various scenarios.” 


 

“Conditions don’t have to be accepted by either party, but if they’re reasonable and there’s no better offer on the table, it’s a very typical part of an ‘accepted conditional offer’, which is the status of a sale when the public sees it as ‘pending,’” he continues.


 

More often than not, conditions are put in place by the buyer because it facilitates a safety net for them. 


 

“If a buyer’s condition(s) can’t be satisfied, they’re no longer under any legal obligation to move forward with the conditional deal,” explains McDougald. 


 

In an offer, a buyer will include a time frame for their condition(s) to be satisfied. If they’re not satisfied by the end date, the deal becomes null and void unless both parties agree to extend the timeframe or the buyer gives notice that the condition(s) won’t be satisfied. In most cases, the buyer is entitled to a return of their deposit money if the conditions aren’t satisfied, but do keep in mind that there is an obligation to make an effort to satisfy the conditions.


 

It should also be noted here that “a condition made by either party is for the benefit of that specific party and they’re entitled to waive their condition any time before the condition’s deadline if they feel it’s no longer required,” emphasizes McDougald. 


 

One of a seller’s favourite offers to receive is an unconditional cash offer. If they like the terms, they sign the acceptance and the property is legally sold. 


 

“There are times, however, when an unconditional cash offer is made as part of a lowball offer in hopes it’ll tempt the seller into signing. Sometimes it works, sometimes it doesn’t,” shares McDougald. “As a REALTOR®, it’s also our job to advise in those situations, but it’s ultimately up to the seller as to what they’ll accept.”

Common conditions

 

There’s a lot to consider beyond the price point of a home, and agreed upon conditions help ensure protection and a smoother sale. These are some of the more common conditions you’ll encounter during a home sale, though they won’t all be present in every offer. 


 

Appraisal contingency

 

Buyers have the right to request an appraisal of the home to compare its true value to the asking price. If the home is appraised for less than what the seller listed in the contract, the buyer may not be approved for the mortgage asking price, re-negotiations may commence, or the buyer may walk away with their deposit. 

 

Home inspections

 

While not a legal obligation, one of the most important and highly recommended conditions to include is a home inspection to ensure the property is structurally sound. Though sellers will occasionally foot the bill, home inspections are usually paid for by the buyer with an inspector of their choosing so they feel confident in the results. 

 

Financing

 

A financing condition or clause lets a seller know the buyer’s offer to purchase the property is conditional on obtaining their financing. The condition affords the buyer time—usually five to seven business days—to confirm their ability to obtain mortgage approval. This protects the buyer in the event the home appraisal comes in low and they’re not approved for the amount offered.

 

Escape clause

 

Usually stipulated by the seller, this clause allows the seller to “escape” or terminate the agreement based on a condition. A common use of the escape clause is when a seller has accepted a conditional offer on their home whereby the buyer requires 10 days to secure their financing. If the seller is receiving better offers during this time, the escape clause allows them to provide the original conditional offer 48 hours to complete the sale and if they can’t, the sellers have the right to go with a new buyer.

 

Land survey review

 

A survey review differs from a home inspection by way of surveying the grounds the property is on and again, while not required, it’s strongly advised to pay for a qualified, chartered professional to survey the property.

 

Cleanliness

 

Who doesn’t want to move into a clean home? This condition specifies the requirement for the home to be professionally cleaned before you move in. 

 

Fixtures and chattels

 

If you expect to have appliances when moving into the new home it’s important to write it in the contract so you’re not met with an unexpectedly bare home on moving day. Make sure everyone is aware of what’s staying and what’s going.





 

During the wild, crazy days of 2021 – 2022 when we experienced the hottest market in history, with sky-high prices to prove it, you wouldn’t have been able to include any conditions on your offer, since there were maybe 25 – 30 other buyers submitting a “firm” offer.  However, although we are still seeing multiple offers in this market, you may be able to submit an offer with conditions on it.

If you are a buyer and are thinking of getting into the market in the next little while, give me a call at 905-683-7800 and I’ll be more than happy to show you how my Home Buying System will help you find and purchase the home of your dreams!
 
And if you’re a homeowner thinking of selling in the near future, you want an agent who knows all about conditions, how to negotiate, and how to make sure you end up with top dollar with no problems that will arise just before closing.  I’ve been selling real estate for over 3 decades and have negotiated hundreds of offers with hundreds of very happy sellers.  Find out more by calling me at 905-683-7800.

Thanks for reading today’s BLOG!!!

Brian Kondo
Sales Representative / Team Leader
The Brian Kondo Real Estate Team
Re/Max Hallmark First Group Realty Ltd.
905-683-7800 office
905-426-7484 direct
brian@briankondo.com
www.BrianKondo.com
www.BrianKondoTeam.com

Merisa Gomez-Adams' article was initially published on REALTOR.ca.  You can find it by clicking here. 

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