Should you entertain an offer conditional on the sale of another property?

May 9, 2019

If you are a seller, the answer is definitely NO. If you are a buyer the answer is also NO. Let me explain.

From the seller’s perspective, accepting a conditional offer, which is subject to the sale of the purchaser’s property, is not a favorable decision for the simple reason it becomes an encumbrance to the sale of your home. By that I mean, once you accept a conditional offer, you owe this first buyer not only the courtesy, but the obligation to give one or two or even three days notice (as per the contact) to remove the condition of the sale of their property and proceed with the purchase of yours. If the first purchaser elects not to do so, the offer becomes null and void and you can pursue with the second offer.

With this obligation to notify the first purchaser of a second acceptable offer, you rick to discourage other serious potential purchasers to offer on your property. A qualified and eager buyer may not have the time or want to be delayed by that obligation to give notice to the first buyer. Therefore, you may unfortunately loose out on a capable and willing buyer because of this encumbrance.

If you are a purchaser and require to sell a property before purchasing another one, you should proceed with the sale of that property prior to making an offer on another one. There are many reasons why. First, some sellers refuse to entertain any offers conditional on the sale of another property for the reasons stated above. Secondly, most sellers are not excited by a conditional offer since it is contingent of the sale of your property and they often feel the obligation of notification too complicated. Since the seller is not moved nor motivated by your offer, they are less likely to negotiate much on their price and entertain terms favorable to you and your family; you are more likely to pay more for the property.

The sad reality, with conditional offers from the perspective of a purchaser, is that you will fall in love with a property and may not be able to conclude the sale and you will probably be heartbroken. It is often the case that purchasers are afraid that they will become homeless in the event they sell their home sell before they can secure another one. This fear needs to be addressed head on with your agent and together you agree on a strategy. An easy solution is, when you receive an offer on your property, insert a condition that you require a reasonable number of days to secure another suitable property, failing which you will not proceed with the sale of your house. This way you are protected and will not become homeless! It is highly unlikely that you will not find the right property since your buyer agent should keep you informed on the market.

Happy buying and selling.

Contact me if you have questions.

Andre Malenfant