When preparing to buy or sell a home, one of the first things to familiarize yourself with is the difference between a firm and a conditional offer. In real estate, the basic definition of a conditional offer is the terms of sale on which two parties agree. If said terms are not met by the date identified on the offer, the agreement is void, and the prospective buyer will receive their deposit back. While some might think that a firm offer is automatically more appealing to sellers, there are situations where a conditional offer may take priority.
There are several conditions the offer may hinge on before your sale becomes final, including those related to your buyer obtaining financing (such as the sale of a property or mortgage approval), as well as a home inspection. If you and your agent do not believe there is a need for a home inspection, then foregoing that option shows the seller that you are committed to purchasing this property. That said, there are ways to make a conditional offer more appealing to the seller.
Generally speaking, the fewer conditions on a conditional offer, the more the sellers will consider accepting it over a firm offer. In some situations, a firm offer might be lower than a conditional offer due to financing. For example, if your offer shows the sellers that you are prepared to pay more, but indicates you will need more time to secure a mortgage, then the sellers are enticed to consider your conditional offer.
Another thing to keep in mind is the implementation of an Escape Clause. An Escape Clause allows the seller to continue to show the property even with a conditional offer in place and even accept another offer as long as it is firm. This gives the buyer with the conditional offer 48-hours to decide if you can or want to remove the conditions and transition to a firm offer or walk away from the property.
Whether a conditional or firm offer is best for you should ultimately be discussed with your real estate agent. They will have excellent insight when it comes to making a good offer, as well as a direct line of communication to the seller’s agent. This means you may be able to gain insight into whether or not they will entertain a conditional offer. The more information you have about buying/selling in your local market, the more prepared you will be as a consumer within the real estate industry. If you are looking to speak to an attorney with expertise in the area of real estate, Mikhailitchenko Law Office has a seasoned team of lawyers who are ready to assist you when it comes to buying or selling your home. Contact us today!