Conditional or unconditional offers: What’s best for you?

If you’re looking to purchase property, it can be tempting to rush in and make an offer. But making an offer without proper conditions opens you up to significant risk.

If an unconditional offer is accepted, you must settle. The purchase must go through, without question. This applies even if you later find out something is wrong with the property or you face financing issues.

It is important to be sure that any requirements you have will be met before you make an offer. So how do you decide whether a conditional or unconditional offer is best for you?

A conditional offer is when a buyer offers to purchase a property subject to certain conditions being met. If the conditions cannot be satisfied, then the agreement may be cancelled and the transaction will not proceed.

Once a conditional offer is accepted by the vendor, the purchaser will have an agreed period of time (e.g. 10 working days) to satisfy the relevant conditions. Once the conditions are satisfied, the purchaser’s lawyer will notify the vendor’s solicitor, and the transaction will proceed to completion and settlement.

Common examples of conditions include obtaining:

• A satisfactory builder’s report
• Confirmation of insurance
• Approval of title
• A satisfactory Land Information Memorandum report from the local council
• Satisfactory financing of the purchase.

Obtaining the necessary due diligence reports before making an offer can cost a bit, especially if the required reports are not made available by the vendor beforehand. Making an offer conditional upon receiving satisfactory reports can therefore be beneficial, as it ensures you will only incur these expenses if your offer is accepted.

But often the most important condition is that suitable finance be arranged. Making an offer conditional upon receiving satisfactory terms for the financing of the purchase means that if you are unable to secure suitable financing you will not be required to proceed with the purchase.

However, it is important to note that if you wish to cancel an agreement using a finance condition, you must provide evidence that you cannot raise the finance on satisfactory terms, such as an email from the bank confirming that your finance has been declined. This is to prevent purchasers from simply changing their mind about a purchase and reneging on the deal.

An unconditional offer, on the other hand, is when a buyer offers to purchase a property without requiring any conditions to be met. If an unconditional offer is accepted by the vendor, you will be required to proceed with the purchase. This means you cannot cancel the transaction if subsequent due diligence reveals problems with the property or the purchase, or if your financing falls through.