In real estate, a conditional offer is a condition of sale that is agreed upon by both the buyer and the seller. The time frame set is important when it comes to such offers because if the condition isn't met within the specified time, the agreement is void and the buyer receives the deposit back. This type of sale can be tricky, but may be a good option in some cases.
A short term conditional offer, such as to obtain approval for mortgage financing or for a home inspection, can work out well as it doesn't tie up the property for long. One that involves a long term or indefinite commitment, such as a condition based on the buyer's current property selling, may be great for the buyer, but not so great for the seller, however. The seller is still free to try to sell the home while the offer is on the property and this may be a strong incentive for the buyer to fulfill the condition.
Still, a real estate agent may not want to show a property that has a conditional offer on it. Most real estate agents instruct sellers to always have an escape clause in their counter offer, so that they don't miss out on a good deal. The escape clause allows the seller to accept another offer as long as it's not also conditional. The buyer with the condition has to meet the terms or waive them and buy the property without the condition or else cancel the agreement so that the seller can accept the other offer.
A conditional offer may work for those who need to sell their current property to buy new property, but don't feel ready to do either one first. If this is the case, advice from a knowledgeable real estate agent is a must to be sure that this method is the best choice. A buyer who insists on conditions may lose out on purchasing a great home because the seller doesn't want to consider any such offers at all.
