In a competitive market, you may feel you need to tailor your offer to appeal to the seller. In a multiple-offer situation, you might even consider making a condition-free offer to stand out from the other buyers. This strategy may make your offer stand out, but it’s not without its risks.

Conditional versus Condition-free Offers

Most offers to purchase include criteria, or conditions, that must be met before the purchase can be completed. These criteria must be written into the offer to purchase, with an exact explanation of how the condition will be met, and when the condition must be met by. If the buyer does not waive conditions by the agreed upon deadline, an offer to purchase becomes void.

A condition can be anything the buyer and seller agree to, as long as it is written in the signed offer to purchase. Typical conditions include conditions for a buyer to:

  • secure financing
  • complete a home inspection to their satisfaction
  • review condominium documents to their satisfaction
  • finalize the sale of their current property

So, a conditional offer has criteria attached, whereas a condition-free offer is an offer to purchase property with no conditions or criteria attached.

Risks of Condition-Free Offers

Conditional offers allow buyers and their licensees to perform due diligence research on a property, like getting a home inspection and properly reviewing all relevant information such as the title or condominium documents. Conditional offers also allow buyers to secure financing for the property, typically through a mortgage.

But you really want this house, and you have pre-approval for a mortgage, so it’s no big deal to submit an offer condition-free, right? Not necessarily. It’s important to understand that a mortgage pre-approval does not guarantee you will secure financing. Any changes to your financial circumstances, interest rates, or other factors could threaten your ability to secure approved financing. It is also important to note that at the pre-approval stage the property is not yet known, and there could be issues based on property type, location, or value that will impact the financing available.

When you make an offer without approved financing in place and without inspecting a property, its title, or its condominium documents (if applicable), it greatly increases the chances the deal with collapse.