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The Importance of Using Conditions of Sale

Posted by Justin Havre on Thursday, September 20th, 2018 at 11:24am.

How to Use conditions When Buying a HomeA condition of purchase is a stipulation a buyer makes to a seller that must be met before finalizing the home sale. Some buyers submit their Offer to Purchase with no conditions, meaning they buy the property as-is, but this is generally only done when purchasing obvious fixer-uppers or if there's a particularly hot market where a buyer has to do so just to remain competitive. Most people have at least a few conditions that they present to a seller during the negotiation period, so buyers should understand how they work before they begin to structure an offer for their City Centre home.


An offer to buy normally comes with a financial backing of either cash-in-hand or a letter of pre-approval from a bank. While a bank's pre-approval is a good sign that the buyer can finance the deal, it is not a guarantee. Some banks may back out of the transaction, leaving the buyer on the hook to make good on their promise even without the loan.

It's an "out" if the buyer is unable to get the complete amount of the loan at the interest rate they need. The buyer may have been pre-approved prior to house hunting, and they might even be approved for financing by the bank or mortgage lender. But even if the buyer has been given the green light by their lender, the terms must be satisfactory to you.

If a buyer enters into contract on a home but can't find anyone to lend them the money, will they be able to get out of your deal?

The answer is yes, but here are the consequences. The buyer will lose the deposit they put down on the house. Let's say that's $10,000. It will be gone. What's worse, if the seller is over a barrel and keeping the buyer's money isn't enough retribution, that seller can sue the buyer. To avoid this awkward situation, buyers request that their purchase offer be conditional on getting final approval from the bank.


An open house or home tour isn't enough to tell you about the home's structural abnormalities—no matter how perfect it looks. Buyers can avoid ugly surprises and unexpected repair costs by asking that their offer rest on a professional home inspector coming to the property. A home inspector may discover plumbing or foundational defects that were unknown to the seller, or they may just give recommendations or information about the state of the major systems of the home. It's up to the buyer to decide if it's worth the risk before signing on the dotted line.


A buyer needs time to consult with other professionals if they're making a conditional offer. Whether a buyer needs to talk to their agent, inspector, banking partner, or even a lawyer, buyers are allowed to make their offer contingent on other people's timelines. They're also allowed to make it contingent on their own timeline. Whether a buyer wants to sell their old house before they finalize the new purchase or just want time to research the neighborhood, scheduling conditions are common in home buying.


Sellers aren't always honest when it comes to the state of their ownership. They may represent themselves as the sole owner when in reality, they're fighting with their ex-spouse for control. Sellers may say they're in good financial standing when there's thousands of dollars of unpaid property tax left on the table. Selling papers in a home sale will normally include basic data about the seller as well as details about their marital, financial, and ownership status of the home. So if a neighbor is fighting for property control of the hedges that divide the two properties, the buyer will know about it. These details take a while to turn up, so buyers can request the sale to be contingent upon the state of the title.

Inclusions (or Exclusions)

Inclusions and exclusions typically refer to physical property on the home sale that a buyer wants included or excluded when the property is transferred over. For example, a buyer may request that the guest house should be included but that the old tool shed in the back be torn down and excluded from the sale. These conditions are usually the easiest to make because it's the buyer and seller working directly together to figure out each other's preferences.

When To Use Real Estate Clauses

When using real estate clauses, buyers should typically try to keep a light touch because more does not mean better. While it can make a buyer feel more comfortable to have a clause for everything that can go wrong, there is a good chance that sellers won’t have the patience for all of them. However, that being said, buyers shouldn’t be afraid to use real estate clauses at all. Having a couple clauses can be a good way for home buyers to protect themselves against unforeseen problems such as dangerous mold infestations or if the home’s appraisal doesn’t line up with the selling price. They key to using real estate clauses is balance, and if a buyer is unsure of the best course of action for their offer, they should consult their real estate agent for expert advice.

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