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Conditional vs. Firm Offers – What You Need to Know

Conditional vs. Firm Offers – What You Need to Know


Couple signing paperwork for an offer on their home

Buying a home is a complex process and considering that it’s likely the biggest purchase we ever make, it’s important to understand all the details: personally, financially and legally. One area that can cause a bit of confusion especially for first-time homebuyers is understanding conditional offers compared to firm offers and how to choose which one is best. Let’s break it down:

Conditional offers

A conditional offer means that the potential buyer wants to purchase the property, but only if their certain conditions or stipulations are met. In other words, a conditional offer means “We really want to buy this home, but there are a few things we need to sort out first”. Naturally there’s a limited time allowed for a conditional offer; otherwise, the seller would experience inconvenient and lengthy delays. In a situation where there are several offers on the table, the conditional offers tend to go to the bottom of the list, unless of course, the buyer has sweetened the deal by adding extra money to the purchase price.

The 3 most popular conditions that people put on a purchase offer are as follows:

  • Financing

Sometimes buyers want to purchase a property before they have secured a mortgage loan or sorted out their finances, down-payments and so on. An offer that’s conditional on financing means that the buyer has a short period of time to get financing approved. While some people may want to waive this condition to hurry the purchase along, if financing isn’t approved and the deal falls through, there can be costly, legal consequences to face.

Getting pre-approved for a mortgage is the easiest way to avoid having to put in a financing condition on an offer. It means that you’re all set to go in terms of financing, and can move the purchase process along more quickly, making your offer more appealing and competitive.

  • Home inspection

An offer that includes the condition that the home passes a formal inspection is quite common. After all, most buyers want to know that there are no hidden issues with the home that could end up being quite expensive or even dangerous, such as mold, asbestos, water damage and so on. A home inspection can often be conducted within a few days, at which point the buyer can proceed with the purchase if they are happy with the results or withdraw their offer.

  • The sale of the current home

In many instances, buyers who own their current home need the proceeds from that sale to pay for the new home. As you can imagine, this is not a favourable situation for sellers who are eager to finalize the deal. This condition can make for a slow process, and may be rejected by the seller if they feel their home will sell more quickly.

One option for homebuyers wishing to put this condition in their offer is that they can apply for a bridge loan from their lender, which will give them temporary funds to cover both the new home purchase and their existing home until it sells.

It’s important to note that if conditions aren’t met within the agreed-upon time, the purchase agreement will simply ‘fall through’ and the seller can accept other offers.

Firm offers

A firm offer is every seller’s dream. It means that there are no conditions on the purchase offer whatsoever and that the entire process will likely run more smoothly and more quickly.

For the buyer, a firm offer means that they are committed to purchasing the property, regardless of whether they have secured financing, had an inspection done, or sold their current home, for example. As you can see, there can be some risk involved for buyers, especially if they aren’t ready to sell their existing home or if the new home has unforeseen repairs or renovations needed. However, a firm offer means there is less chance of it being rejected, which is good news for serious buyers in a heated, competitive market.

In any type of real estate market, it’s important to be prepared and know your options. Be sure to connect with me before your next home purchase to talk to me about pre-approvals as well as conditional or firm offers. As an experienced, qualified mortgage broker, it’s my job to help you find the best mortgage solution and the best rate for your situation specifically. Call today to book your free consultation at (705) 315-0516, and let’s get you into your dream home.

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