What is a conditional offer? Despite the frequent use of the term, many don’t know what a conditional offer is or the requirements that come with it.
If you’ve either purchased or sold a home or are looking for a property to buy, you may have encountered a “conditional offer” or at least heard of the concept. While many are familiar with the term itself, its definition and what it entails isn’t exactly common knowledge.
What Is a Conditional Offer?
Put simply, a conditional offer is a purchaser’s offer to buy the home when the conditions stated in the offer are met within a certain amount of time. The buyer and the seller of the home will be required to agree to the conditions in the offer, which will be void if the conditions aren’t met within the allotted time. The typical timeframe for a conditional offer is 3 to 7 days, after which period the buyer will receive the deposit once the conditional offer is no longer valid.
Sellers can still show the property to other prospective buyers even after an offer is placed until the purchase is made or the offer becomes void.
What Are Typical Conditions?
The conditions often included in a conditional offer may include:
Many conditional offers include a home inspection, which offers protection to buyers by enabling them to either withdraw or cancel the offer if the inspection reveals certain red flags. To ensure the inspection is properly conducted, qualified home inspectors will need to complete it.
Sale of Current Home
Another condition included in many offers is making the offer dependent on the sale of the buyer’s current home. This condition will be necessary if the buyer wants to use the money earned from the sale of the current home when buying the new home, but buyers should make sure they can sell the home within a specific time frame to avoid the cancellation of the offer.
Financing conditions require the buyer to make sure that financing is in place to make a purchase. Even if financing is pre-approved, lenders could change the total amount for which the buyer is approved depending on the results of an appraisal, which makes it important for buyers to learn more about the appraisal process prior to seeking a lender.
Buyers need to act in good faith, meaning that if a seller suspects a buyer hasn’t taken the proper steps toward securing financing, the seller may be able to file a lawsuit against the potential buyer.
If you’re looking for an experienced real estate lawyer who will help you with all aspects of buying a home, contact us for more information.