Over the past few months, the raging house market has begun to cool and turn from a sellers market into a buyers market. Prices are beginning to cool, and there are more properties available now for buyers. There isn’t quite the same pressure to “buy or miss out” as there was a few months ago, and a result we have seen is a change in what is included in property contracts.
In the past, people were keen to present with the most attractive offer and the least amount of conditions, and that meant sometimes putting in either an unconditional offer or an offer with very minimal conditions.
Now the tide has turned and we are seeing more and more conditions pop up in sales contracts. Conditions like subject to a buyer selling their own home is something that we wouldn’t have seen so much months ago.
So what exactly is the difference between conditional and unconditional and when does an offer go “unconditional?”….
A conditional offer is when you effectively say to the vendor, “I’d like to purchase this house, at this price - provided these conditions are met.” The conditions commonly include a building inspection, LIM report, and mortgage approval, but there can be other conditions as well. Your lawyer will let you know which conditions you need to set.
If you do your due diligence and don’t want to continue with the sale - for example, if your building report shows that there’s something structurally wrong with the property, or if your lender declines your mortgage application - you can choose to remove your offer.
When your offer “goes unconditional”, you’re saying to the vendor that the conditions have been met, you’re happy with the property, and you’re ready to go ahead with the sale. This is a legal contract and means that you’re 100% committed to buying the property.
As mentioned above, sometimes offers can be presented as unconditional and, if accepted, means the house is unconditional immediately. This means buyers must have done their due diligence prior and ensure their lender is 100% happy with the purchase. Auctions are a form of selling where the sale is unconditional as soon as the hammer falls.
Before putting in any form of offer, it’s important to have talked to both your mortgage advisor and your lawyer to ensure your finance and pre-approval is correct and that any necessary conditions are included in your offer.
If it’s your first time buying a home, you might benefit from downloading our FREE Home Buyers Guide. This eBook explains the home buying process from start to finish and has lots of information for first home buyers (or those who haven’t purchased for a while). Click here to download your copy.