Conditions – also known as contingencies, are an essential component of any real estate deal. Beyond allowing buyers and sellers to advocate various interests during the transaction, home buying conditions can greatly influence whether a sale is finalized.
Whether you are preparing to buy a house, sell one, or both, understanding how house offer conditions are negotiated and met is crucial.
This blog is intended as an introductory guide to home buying conditions. Continue reading for more insights.
Exploring the Toronto real estate market? We can guide you toward an exceptional result. Call 416.722.4723 or reach us by email at evan@christensengroup.ca.
What is a Conditional Offer?
When a buyer places an offer on a house, there are a number of critical variables included in it. In addition to foundational details such as price and timeline, the offer may also include conditions.
In basic terms, a conditional offer is a sales agreement between a home buyer and seller in which the property’s final sale is contingent upon specific terms being met. If these conditions are not satisfied within a predefined timeframe, the offer becomes non-binding, allowing either party to potentially withdraw from the transaction.
While conditions are common in today’s marketplace, it is not outright mandatory for buyers to include them when placing an offer on a home. In fact, buyers may choose to forgo conditions to increase the appeal of their offer in certain circumstances – such as a competitive seller’s market.
Searching for strategic guidance on buying a home? Consider these related readings for more insights.
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Common Conditions For Buying a House
From a technical standpoint, there are dozens of hypothetical conditions that could be inserted into a buying offer. However, in the realm of Toronto real estate, only a few are commonly used conditions when buying a house.
Buyers should familiarize themselves with these frequently used conditions to determine which may provide a relevant benefit when placing an offer. Likewise, sellers should also understand the implications of these conditions as they prepare for the negotiation process.
Home Financing Condition
A home financing condition makes a buyer’s offer contingent on their ability to acquire a mortgage on the property. This condition can ensure the buyer is not stuck with a home they can’t afford.
However, the circumstances where a buyer may be obliged to include this condition are easily avoidable. Most buyers should get pre-approved for a mortgage before beginning their home search. This allows them to place an offer with confidence in their financial strength.
Home Inspection Condition
A home inspection condition allows a buyer to have the property analyzed by a professional before the sale is finalized. If the home inspection uncovers any undisclosed defects or issues, the buyer can renegotiate their initial offer or potentially walk away altogether.
Want to know more about the inspection process? Find out what home inspections look for.
Home Sale Condition
A home sale condition makes the buyer’s offer contingent on the sale of their current home. If the buyer’s property does not sell before a chosen date, their initial offer can be renegotiated or withdrawn.
What Conditions Should I Put on a House Offer?
Despite the protections they can provide, buyers should think strategically when selecting conditions to include in their offer. In certain cases, including too many (or simply unnecessary) conditions in a buying offer can alienate sellers, deterring them from accepting or negotiating further. On the other hand, sellers should remain vigilant about accepting offers that are condition-dense.
Eager to know more about offers and negotiations? Consider these blog posts for more advice.
- 5 Things Buyers Can Get Through Negotiations
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- 5 Negotiation Tips To Use When You’re Buying a House
Negotiating Conditions
Conditions, like other facets of a home buying offer, are subject to negotiation. Once an offer has been placed, the seller may ignore it or elect to begin negotiations.
Once both parties are comfortable with the terms of the offer, the home becomes conditionally sold. Following this conditional acceptance, there is an official deadline for each condition in the agreement to be fulfilled – often between three days and one week, depending on the contingency itself. If the conditions are not met within the designated timeframe, the conditional sale is no longer binding.
Partner With an Expert
Whether you intend to buy a home, sell one, or both, setting yourself up for success requires the help of an experienced professional. That’s where we come in – Christensen Real Estate Group.
Our highly accredited and experienced team of real estate agents will work tirelessly to secure the best possible price, terms, conditions, and value on your home purchase or sale.
Buying or selling in Toronto? Work with industry experts. Call 416.772.4723 or email us at evan@christensengroup.ca to begin.
