25 February 2020
What’s your offer? Conditional vs. unconditional explained!
For first home buyers, purchasing your first property can be a whirlwind of new jargon and processes. Don’t run into the property market blind. Make sure you understand what you are e offering, and how this can affect the decision-making of both a buyer and a seller.
Conditional offers, explained
A conditional offer is when you make an offer at a certain price, but the offer is subject to certain conditions being met within a specified timeframe. These conditions can vary depending on your circumstances and the property.
For example, you offer $525,000 on a property, subject to ten working days for a builder’s report and finance. This means your offer won’t go unconditional until your finance is approved and you’ve got the tick of approval from a builder’s report.
If you can’t get finance approval or a satisfactory builder’s report, you can withdraw your offer.
Essentially, your offer can include any conditions you want, but the more conditions you include, the less attractive your offer may become to the seller. Always talk to your lawyer and real estate agent about what conditions you should include in your offer.
Common conditions include:
- Builders report
- LIM report (Land Information Memorandum)
- Title search
- Lawyer’s approval
- Subject to sale of existing property
- Subject to due diligence
What does unconditional mean
If there are no conditions attached to an offer, it is considered an unconditional offer. Once an unconditional offer is accepted, neither the buyer or seller can cancel the agreement.
Unconditional offers are often referred to as ‘cash buyers’ and can be very attractive to sellers.
Before making an unconditional offer, you need to complete all your checks on the property such as builder’s report and LIM, and you need to make sure finance is approved.
The Waikato property market has seen an increase in multi-party offers. In this situation, the seller will take into account the price and conditions of all the offers before making a decision.
Your offer may be the highest, but if it has conditions to attached to it, it may not be as attractive as a lower offer with no conditions.
Offers at auction
Offers placed at auction are unconditional, which is one of the many reasons why auctions are so attractive to sellers.
At Lugtons we are seeing an increase in properties going to auction, with a 78% successful sale rate at auction. Check out Claire’s latest market update for more on the current market.
If you’re ready to place an offer and want to know how you can put your best foot forward while protecting your interests, talk to a Lugtons Real Estate Salesperson. We’re here to help!