What You Need to Know About: Conditional Sales

Written by Gordon's on . Posted in Blog

conditional_sales_-_stock_image_-_banner.jpgConditions on property sales are the “strings attached” component of making a deal move forward. Until these conditions are met and signed off on, the home is still technically “for sale” and the deal is not guaranteed.

It is common to receive conditional offers and sellers should not be alarmed.

Standard conditions include:

Evidence of Insurability: the buyer wants to make sure that he or she can obtain insurance for the property. Typically, the insurer wants to see that wiring and plumbing are updated. If work does need to be completed to bring the home up to code, insurance companies may provide temporary insurance while the new owner completes the work, or re-negotiate the deal to include upgrades.

Financing: the buyer wants to make sure they can make the necessary financial arrangements to purchase the house, for example, obtaining a mortgage. While most buyers are pre-approved, it is safer for buyers to put this in, as rates change, and bridge financing may be necessary.

Sale of the buyer’s exiting home: the buyer may wish to have their present property sold prior to taking on another one. This condition will often include a deadline for the buyers to sell their home and can be dangerous for the seller. These conditions are best accepted with a “24 hour clause” which allows the seller to continue to show their property and entertain offers, but give buyers first rights to it with 24 hours to sign off on conditions.

Home inspection: Many buyers seek expert inspectors to come in and give the property a thorough once over. This sheds light on discrepancies, repairs needed, safety issues, etc., that may have been missed by the buyer. Many sellers take the proactive approach and have an inspection done on their own dime. The inspection details can sit on the coffee table where interested parties can review it.

Zoning and municipal approval: To ensure that the current or intended use of the property is in agreement with existing zoning bylaws and provide a survey. This too, is something the seller can be proactive on and supply to potential buyers.

Water:  Obtaining a clear water potability certificate is necessary. Banks will not provide mortgages without information on the well of a property, and its septic system.

While it is the norm for buyers to put forth conditional offers, motivated buyers limit conditions to only what is necessary, as it reduces bargaining power. When there are a multitude of interested buyers, conditions are usually stricken from the deal due to competition.

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