When making an offer to buy a property, the purchaser has the opportunity to make a conditional or an unconditional offer.
These two different types of offers can have vastly different outcomes for the sale of the property.
While conditional offers are quite common in private treaty sales, both types of offer can be used. Buyers and sellers should seek professional advice before making or accepting a conditional or unconditional offer.
A conditional offer is an offer made by the buyer that states, in the contract, the sale is “subject to” other events occurring. That is, while you agree to buy the home, you are agreeing to buy it when specific conditions are met. For instance, a condition that may be placed on the sale could be that the sale can only go through if the buyer is able to get financing from a chosen bank.
Common conditions placed on offers include:
- Finance needs to work out for the sale to go ahead
- Building and pest inspection showing no major problems
- The sale of another property (such as a former home) is required for the contract to be applicable
- The bank’s valuation needs to come back at the purchase price
- Confirmation of council approval of some structures (such as a granny flat)
A solicitor or conveyancer will be required to write up these conditions formally into the contract and you should ask them specifically what this means you need to do to fulfil the contract. For instance, if you ask for the contract to be subject to finance, then you may also want to specify a lender – otherwise, the seller might reasonably expect you to try all the available lenders to achieve finance.
You can make your offer subject to multiple conditions and if the conditions are not met, you can back out of the sale without a penalty. This offers the purchaser a level of protection that can make a transaction go more smoothly and provide some stress relief.
It also means if something unsavoury does appear during one of the searches, there’s an opportunity to negotiate or, in the worst-case scenario, back out completely from the sale. It’s a safety net for the purchaser.
However, while conditional offers are very common, there is the risk a seller will not be comfortable agreeing to an offer with too many requirements that could see the sale fall through. If another buyer is making a similar offer with fewer restrictions, the seller may choose to accept their offer first. You should speak to the real estate agent about your concerns before putting in an offer, particularly with any unusual conditions.
Making an unconditional offer requires the buyer to be certain they want to buy and that they can complete the transaction when it comes to settlement day. Regardless of any changes between the time the offer is accepted and the day it is officially sold, the buyer will need to follow through with the transaction.
Sellers are often more willing to accept an unconditional offer as this provides them a level of certainty that the sale will go ahead. In some situations, it may be possible to make an unconditional offer at a lower than market price. Speak to the agent to find out whether this could be a worthwhile strategy.