A conditional offer means that a buyer is interested in buying the home, but with expectations that certain conditions will be met. Naturally, sellers tend to gravitate towards firm offers, especially if the seller is dealing with multiple offers. However, conditional offers can seem more appealing when the buyer is offering more money or the buyer includes things in the deal to make it more appealing.
Typically, there are three common situations that cause buyers to put conditions in an offer.
The first common condition in a conditional offer is that the home passes a formal home inspection before the deal goes through. Buyers want to feel comfortable with the condition of the home, and certain no expensive issues arise (like mold, water damage, etc.) after the purchase of the home.
The second common condition in a conditional offer is financing. Sometimes buyers want to purchase a property before being approved for a mortgage have their down-payment sorted. This gives the buyer a window of time to get their finances in order. Sellers should be wary of waiving this type of condition to hurry along with the selling process. If financing isn’t approved and the sale falls through the cracks, there could be legal consequences. For buyers, getting pre-approved for a mortgage eliminates this hassle.
The third common condition in conditional offers is the condition that the buyers home sells. Obviously, this isn’t ideal for the seller since it can slow that sale process and there isn’t any guarantee that the buyer will sell their home. Homebuyers in this situation should apply for a bridge loan from their lender. A bridge loan can give them temporary financing to cover the costs for their new home and their existing home.
It is important to note that in all conditional offers, there is a time limit. If terms aren’t agreed upon after time is up, the seller can begin to take other offers.