What is a conditional offer?
A conditional offer is an offer to purchase a property with terms that must be met before closing, such as successful home inspection, mortgage approval, or sale of the buyer's existing home.
In London, Ontario real estate transactions, a conditional offer is an offer to purchase that attaches one or more conditions before the buyer becomes fully committed to the sale. Common conditions include approval of financing, satisfactory home inspection results, or the successful sale of the buyer's current property. These conditions protect the buyer by allowing them to withdraw from the deal (usually without penalty) if the stated condition is not met by an agreed deadline.
When a buyer and seller agree on an offer with conditions, a specific timeframe is set for each condition to be fulfilled. For example, a financing condition typically allows 21 to 30 days for mortgage approval, while an inspection condition might allow 7 to 14 days for the buyer to arrange and review the inspection report. If the buyer's lender denies the mortgage application or the inspection reveals major defects, the buyer can usually terminate the agreement and recover their deposit.
Conditions can also be waived. If a buyer chooses to remove a condition before its deadline, they give up the right to back out on that basis. A seller may request conditions be waived to make the offer more attractive, particularly in a competitive market. Once all conditions are satisfied or waived, the offer becomes firm and both parties are legally bound to complete the transaction.
Residential sales agents in the area advise clients on which conditions are prudent given market conditions and the property's condition.