How Conditional Offers Work

Conditional offers are a normal part of many real estate transactions, but they are often misunderstood. Knowing how conditions work helps buyers and sellers understand risk, certainty, and timing.

What is a conditional offer

A conditional offer includes one or more conditions that must be satisfied before the agreement becomes firm. Until conditions are waived or fulfilled in writing, the transaction remains uncertain.

Common conditions

Common conditions include:
• Financing, to confirm mortgage approval
• Home inspection, to assess property condition
• Review of documents, such as a condominium status certificate
• Sale of the buyer’s existing home, in some cases

Each condition includes a defined conditional period.

How the conditional period works

During the conditional period, the buyer completes due diligence. If satisfied, conditions are waived in writing and the agreement becomes legally binding.

If conditions are not satisfied and not waived, the agreement may be terminated based on its wording.

What “firm” means

A firm agreement has no remaining conditions. Once firm, deposits are typically at risk, and backing out without legal grounds can have serious consequences.

Additional note for investment properties

For income properties, buyers may also review leases, rents, or operating expenses during the conditional period to confirm expectations before the deal becomes firm.

What conditions mean for buyers

Conditions allow buyers to:
• Confirm financing
• Identify material property issues
• Review legal or condominium documents
• Avoid committing without full information

What conditions mean for sellers

Conditional offers introduce a period of uncertainty. Sellers often consider:
• Number and type of conditions
• Length of the conditional period
• Likelihood of conditions being satisfied

Final thoughts

Conditions are an important risk management tool. Understanding how they affect certainty helps both buyers and sellers evaluate offers more clearly.

For more detail, visit our Buyers page or Sellers page.