Whether you’re buying or selling property, by private treaty or at auction, you’ll want to understand what conditional and unconditional offers are and how they may affect your situation.
In a private treaty sale, many buyers make “conditional” offers, or offers to buy a home subject to certain requirements being met. These conditions can vary greatly, so it’s important that vendors have their conveyancer or solicitor deal look into each offer.
Common conditions included in offers can be:
- Finance – The contract is only valid if the purchaser manages to obtain a loan for the property.
- Satisfactory building and pest inspection – Due diligence from the buyer may see them offer on the basis that expert reports, such as building reports or title reports, come back satisfactorily.
- Subject to the sale of another dwelling – Homebuyers purchasing while waiting for their own home to sell may need to see their own sale go ahead first.
The seller can negotiate the conditions with the buyer. If these conditions are not met in a specified time period, the contract is invalid.
But buyers making conditional offers should be aware that if their conditions are met they are obliged to ahead. If all the conditions are met then the buyer cannot back out without paying a penalty. So the buyer is obligated to have gone to appropriate lengths to fulfill their end of the deal.
And it is important for vendors to consider the likelihood of each offer succeeding, based on how stringent the particular requirements are.
In an auction environment, all offers are unconditional. This means they are made without any conditions attached and represent an outright offer to purchase the property.
Unconditional offers can also be made outside of auctions. Unconditional offers can be more appealing to vendors as they know there won’t be a reason for the buyer to pull out from the contract.
Outside of auctions, buyers will usually include a time period for how long the unconditional offer is valid for. And when an unconditional offer is accepted the buyer will need to ensure they have access to the full amount required to pay the vendor.