Learning the Ins & Outs of Conditional Offers
By Agent Kate Broddick – Real Estate Sales Representative
If you’re selling a property, chances are you’ll receive one. If you’re buying a property, you may even make one. What are they?
They’re Conditional Offers. And they’re exactly what they sound like: an offer to buy a house, but with some conditions that need to be taken care of first.
For instance, one of the most common conditions we see on offers is a Home Inspection. This means, someone wants to buy a house, but before the deal is finalized, they want a licensed Home Inspector to look at it first and make sure its structurally sound. Other conditional offers might be based on Financing – where the buyer wants a little bit of time to make sure they will be approved for a mortgage on this home. We even see conditions that cover everything from septic inspections, to condo status certificates and more. But the point is, these conditions need to be finalized before the house is considered “Officially Sold”.
So let’s say there is a Buyer named Bill. Bill wants to buy a house but he wants to do his due diligence and have this property inspected first. His offer to the Sellers includes a Condition Of Home Inspection, stating that he needs 5 business days to get this done. The Seller accepts this offer and therefore the home is, what we call, “Conditionally Sold”, or “Under Contract”. Now Bill calls up Mr. Inspector and together they book an appointment to look at the house from top to bottom.
If the inspection goes well, and Bill is confident that this house only needs minor work he’s willing to accept, then Bill’s going to need to sign a Notice Of Fulfillment. This document states that Bill has gotten his inspection done and therefore this Condition has been fulfilled. If this was Bill’s only condition on his offer, then the house is considered SOLD and Bill can start packing his bags! But sometimes, we have another situation pop up…
Let’s say that Bill’s offer included a Condition of Home Inspection, that would be due within 5 days. But, during those 5 days, Bill decides that he loves the house so much and doesn’t even care to have an inspection done anymore. Or maybe he just got lazy and never got around to setting up an appointment with Mr. Inspector that week. Before those 5 days have ended, Bill needs to tell the Sellers he’s not going to be getting the Inspection done afterall. This would be done with a form that we call a Waiver. Bill is waiving his need to get an Inspection done, and therefore the Condition is no longer needed. Once this form is signed, the home can be considered SOLD and Bill can book the moving van!
Those are the basics of Fulfillments and Waivers that you can expect to encounter when you’re dealing with a Conditional Offer. These need to be signed within the allotted timeframe set out in the offer, whether it’s 5 business days, 10 days, and so on. So if you’re considering putting in an offer on a home, or even accepting one as a Seller, get ready for the Conditions, Waivers and Fulfillments… oh my!