Buying a home is one of the most significant purchases people will make throughout their lives. With hundreds of thousands of dollars on the line and a person’s living situation and lifestyle, buyers and sellers should carefully consider how they can protect themselves throughout this complicated transaction.
One way to do this is to use and negotiate conditions appropriately.
Common conditions in a purchase agreement
There are several conditions you may see or consider before finalizing a sale. Some common conditions include:
- Financing conditions, stating that the offer is subject to a buyer securing financing
- Inspection conditions, stating that the price offered stands as long as there is a satisfactory inspection
- Time allowed for the buyer to sell his or her current home
- Legal approval, giving one or both parties time to consult with a lawyer
- Time to verify ownership and review the history of the property
The conditions you may or may not include in your purchase agreement depends on many factors, from whether you are buying or selling the home to how quickly you want to complete the transaction.
Using conditions wisely
Conditions can protect both parties. They can allow buyers to back out of a deal if the property is inadequate or problematic; they can protect sellers by allowing them to keep a deposit or take legal action against a buyer who backs out of an offer.
However, conditions are not always valuable in all agreements. For instance, if you are a buyer in a highly competitive market who wants to make your offer as attractive as possible, you might consider waiving conditions to fast-track the process.
The conditions you include or exclude in an offer can be almost as important as the price. Waiving certain conditions could be attractive to sellers but leave buyers with some unpleasant surprises while having too many conditions could provide more protection but result in a lengthier process.
As such, it is crucial to discuss conditions and other details of a purchase agreement with a lawyer and understand what the various elements mean. Again, these transactions are highly complicated, but the right offer can help buyers and sellers get what they want.