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How do Conditional Offers Work?

08.18.2022 | Real Estate Market

As Toronto’s expansive market slowly continues to balance out, real estate trends from years past are returning to the city. Perhaps most notably, conditional offers have become renormalized as buyers face less competitive conditions. 

Understanding the nature of conditional offers is critical for both buyers and sellers entering today’s market.  

In our nearly 40 years of transacting real estate in Toronto, we’ve weathered every market fluctuation and know exactly how to navigate new trends. 

Based on our decades of local experience, here is what we think you should know about conditional offers. 


Toronto’s real estate landscape is shifting. Explore these helpful resources to stay one step ahead of the competition. 


Condition Basics

In short, a conditional offer is a transactional agreement between a seller and buyer, in which the final sale of a property is dependent on certain terms. If the determining conditions are not met within a set time frame, the offer is no longer binding and either party can move on from the deal. 

Like a home’s sale price, the buyer and seller are able to negotiate back and forth on the conditions included in an offer. After reaching an initial agreement, the buyer will make a deposit and the home will be conditionally sold.  

The included conditions will have a set expiry date. Expiration can differ based on the nature of each condition, however, 3 to 7 days is a fairly common timeline. If the buyer or seller is unable to meet the terms within the set period, the conditional sale is no longer binding. 

Common Conditions in a Balanced Market 

In past years, most sellers in the GTA had the option to outright reject conditional offers. However, today’s market is more balanced, and buyers have the ability to tilt the transaction in their favour. 

Here’s a look at some of the most common conditions in real estate transactions today. 

Home Inspection: Offers conditional on inspection allow buyers to withdraw or modify their offer if the inspection uncovers an issue or problem with the home. 

Buyer Financing: This condition ensures the buyer is able to obtain adequate financing (typically in the form of a mortgage) before the sale is finalized. 

Document Review: For condominium sales, most buyers will want to closely inspect and review all relevant documentation before the sale is finalized.  

Home Sale: This condition allows buyers to withdraw their offer if their existing home doesn’t sell within a specified time frame. 

Understanding The Escape Clause

After an offer is placed, a home sale can not be finalized until all conditions are met. During the period of time between the initial offer and closing, other interested buyers are still able to submit offers on the property. The escape clause is a portion of the purchase agreement that protects both parties should a second offer be placed on the conditionally sold home.

In brief, an escape clause requires the seller to inform the original buyer if they receive a different offer and intend to pursue it. The buyer will then have a set period of time to waive the conditions of their initial offer. They can also opt to not proceed with the sale altogether.

For sellers, the escape clause is beneficial as it allows them to continue receiving offers in case the buyer doesn’t meet the terms of the agreement. The clause also protects buyers as it allows them to waive their conditions and complete the transaction even if the seller receives a stronger offer from another buyer. 


About to buy or sell a home for the first time? We’ve assembled some comprehensive blog posts to help you enter the world of real estate with ease. 


Trust The Pros

Conditions are highly variable. Like any part of the real estate process, setting yourself up for success requires the help of an experienced professional. 

As a buyer, working with a trusted real estate agent allows you to navigate the offer and negotiations phase with informed confidence. Your agent can help you fully understand your position in the market as a buyer. Considering all relevant factors, they’ll help you craft a compelling offer on your dream home – including conditions if necessary. 

If selling, your agent is your best resource for determining which offers are strongest and most suited to your circumstances. They can help you fully understand the conditions included in an offer and help you coordinate fulfilling them. Your agent can also help you strategically counteroffer and ensure the deal gets done with minimal stress. 

Looking to begin your Toronto real estate journey? Reach out to learn how we help you exceed your goals.

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