You’d hope that after everything you’ve done to find the right home, including talking to real estate agents and mortgage brokers; driving all over town; surfing the web; and worrying that you’ll never find the right home, when you do find it, all you’d have to do is just pay for it and get on with your life.
Unfortunately, that’s rarely the case in real estate transactions and that’s why conditional offers exist (they’re sometimes called an Agreement of Purchase and Sale). Both homebuyers and sellers should learn about what is a conditional offer and how does it work.
Conditional Offers & How they Work
Often used when placing bids on Markham houses for sale, a conditional offer is an offer to purchase a home for a specified price if the conditions outlined in the offer are met within a certain period of time. A simple example would be the purchaser submitting an offer to buy the home with the condition that it passes a home inspection within seven days.
Both the home buyer and seller must agree to the conditions outlined in the offer. If the conditions are not fulfilled or waived in the specified time frame, the offer becomes null and void.
The following are among the more common conditions that may be outlined in a conditional offer.
- Financing – A financing condition means that the buyer must have secure financing for the home purchase in place before the sale can be finalized.
- Home Inspection – Buyers often add a condition that they may cancel or withdraw their offer based on the results of a home inspection.
- Selling a Current Home – Buyers may also make their offer conditional on the sale of their current home within a reasonable timeframe
One area of confusion about conditional offers is that they do not mean that the seller must wait until the time period in the offer expires before showing the home to other potential buyers. In other words, sellers can show their home to other buyers even if a conditional offer has been made.
However, unless an ‘escape clause’ is part of the offer, if all conditions are met or waived within the set timeframe, then the seller is bound to accept the buyer’s offer.
An escape clause would allow a seller to accept a better offer if one comes along before all the conditions outlined in the offer are met.
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