You find a home that you’re interested in buying. But you have concerns. Is it in a good state of repair? Will you be able to secure the right financing? Can you sell your current home in time?
Any of these issues can prevent you from making a prompt offer and, as a result, cause you to lose the opportunity.
The solution? Make a conditional offer.
A conditional offer means just that. You offer to purchase the home so long as certain conditions, which you specify, are satisfied. Here are the most common examples:
- “Subject to financing”. You will buy the home if you’re able to arrange for a suitable mortgage.
- “Subject to inspection”. You will buy the home if it passes inspection by a qualified home inspector of your choice. If he or she finds that substantial repairs are required, you can either walk away from the deal or renegotiate.
- “Subject to selling my current home”. You will buy the home if you can sell your own home within a set period of time. For example: 45 days. A seller might agree to this if your home is competitively priced.
- “Subject to the repair of ____”. You will buy the home if the seller makes certain repairs, at his or her own expense. This can range from something relatively minor, such as fixing a crack in the foundation, to a major repair like replacing the roof shingles.
A conditional offer will protect you. However, there is always the risk that the seller will say “No.” If you’re in a competitive situation, for example, and another buyer’s offer is unconditional, you may lose the deal - even if your offer price is higher!
So you really need to use conditional offers strategically, in just the right way, under just the right circumstances.