Making an offer is one of the crucial steps that can make or break a property transaction. Is it better to make an unconditional offer or a conditional one?
In a think piece, RE/MAX Integra public relations manager Lydia McNutt said buyers need to know when to apply the two types of offer.
"A firm offer is common in a hot market. With all other things being equal, a seller is more likely to accept the unconditional offer over one that could potentially fall through for a number of reasons," she said.
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However, there are some instances when conditional offers could be applied. For instance, a common condition for first-home buyers involves financing. These buyers need to make a conditional offer as they wait to get the go-signal from their mortgage provider.
"The buyer will have a few days to get this, and the process will include a home appraisal. If the lender does not agree to finance the property, the buyer will notify the seller and the offer becomes null and void," McNutt said.
For some, the quality of the property is a big concern, making it a must to make an offer conditional on home inspection.
Before proceeding with the deal, the buyer will first inspect the house and examine its build, including the structure, roof, plumbing, and electrical systems, to ensure that it is in good condition.
"If the home isn't up to par, this condition allows the buyer to return to the seller and request repairs, a reduction in the price, or can rescind the offer entirely," McNutt said.
A homebuyer can also make an offer that is conditional on the sale of an existing home. Under this offer, the buyer ensures that his or her current residence gets sold before agreeing to purchase the target property.
"This isn't ideal for the seller, as every condition has a potential domino effect," McNutt said.
It is essential, especially for first-home buyers, to consult a real estate agent to guide them through the process.
"All your questions around how to make an offer on a house are valid, as these seemingly small details will have a domino effect throughout the rest of the purchasing process and even long after you've taken possession. Work with an experienced real estate agent and a good real estate lawyer to ensure your best interests come first," McNutt said.