Sometimes You Have To Make a Conditional Offer
In some situations you have to add conditions to an offer on a house. This is a called a “conditional offer”, also sometimes referred to as a “contingent offer”. In most cases a conditional offer is one that is made between the two parties involved in a home sale and require that certain conditions are met before an offer will be made on the property. Below are 5 common reasons conditional offers are made.
Subject to Approved Financing
Perhaps you already have a pre-approval letter from your lender. In reality it’s a promise, you still have to go through a formal loan approval process that you have to stipulate with the offer you are making to purchase. You agree to purchase the home provided you receive financing from your mortgage lender. This clause protects you in case anything unexpected occurs in the financing process.
Subject to Inspection
Perhaps you’re a general contractor buying the house with years of experience reviewing problems with homes. Most of us are not however. This is where hiring a professional home inspector can prevent you from buying a home that can become a money pit. We highly recommend that you invest in this to protect your interest and home investment dollars. After the home inspection is complete you can put in a conditional offer with contingencies that stipulates the necessary repairs be completed before you accept the offer.
Subject to Legal Review
You have the option to have your lawyer to review and approve the contract, within a specified time limit.
Subject to Survey
An up-to-date land survey must be provided, confirming that the property does not violate right-of-way for utilities or encroach on any neighboring property.
Subject to Appraisal
The purchase depends upon a licensed appraiser’s valuation that the sales price on your contract is the fair market value of the home.
How to Make Your Own Conditional Offer
Say your home inspection reveals some plumbing issues or an old HVAC system that needs to be replaced. You can negotiate with the seller to meet them halfway on replacing the unit or reducing the offer to match a replacement. Most sellers are willing to either offer a lump sum reduction or make a few repairs before you take over possession of the home.
Just try not to over do it with a conditional offer as the seller may decide to cancel the contract entirely.
As each contingency is successfully met, both parties sign an appendix of the condition, indicating that it is no longer an obstacle to the fulfillment of the contract and the agreement. Working with a real estate professional can help a great deal with how to handle conditional offers. Once an agreement has been met, the only thing left to do is secure financing!