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What Is A Condition In Real Estate

January 21, 2015

In the world of real estate, a conditional sale is a transaction that takes place between the seller of a property and the buyer but it has strings attached to it.

What those strings are could be a countless list of demands from mundane and ordinary to out there and wacky. Typically, the most common reasons for a conditional offer tend to be to allow the buyer time to secure financing and to have the home inspected in such a way that it meets the buyer’s approval.

In both cases, the conditional offers are generally for a short period of time as the seller doesn’t want their property tied up for too long. A better deal – perhaps more money and no conditions or fewer — could come along. If that happens the conditional buyer has first dibs on the property but must waive the condition or conditions and buy the house or cancel the agreement allowing the seller to accept the other offer.

If the condition isn’t met within the specified time frame, the conditional sale agreement becomes void and any deposit is returned to the buyer.

Less favourable for the seller is a condition that goes on longer or indefinitely. This might be a sale based on the buyer selling their home. Of course, there are ways to mitigate that as these offers often are given a deadline of 30 to 60 days.

The odds of such an offer going through will depend on a number of factors such as the condition of the current real estate market. In a seller’s market, a conditional-on-sale offer might be a tough sell as the vendor may have many more offers to choose from, while in a buyer’s market this offer may be more appealing as there are more houses for sale than there are buyers.

Naturally, the fewer conditions within an offer, the more likelihood there is of a deal going through.

Conditions can also serve to disengage a buyer from an agreement should they suffer from buyer’s remorse. Say the purchaser isn’t one hundred per cent sure about the house and they’ve put in an offer conditional on a home inspection. Even though the home inspection comes back relatively clean, the purchaser can say they’re not satisfied with the outcome and walk away from the deal.

Rob Golfi of The Golfi Team is a Sales Representative with Remax Escarpment Realty Inc, your real estate expert servicing the Hamilton, Stoney Creek, Grimsby and surrounding areas. You can contact Rob at robgolfi@golfiteam.com

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