Conditional vs unconditional offers to buy real estate: what's the difference?

Entering the property market and navigating the different types of offers can be confusing. 

A first time buyer was looking to purchase a property.  The property they were interested in was being sold by tender.  The agent told them that the vendor was hoping to receive unconditional offers or as close to unconditional as possible.  The buyer did not know what the difference between conditional and unconditional was, so sought advice.  

Conditional Offers

Conditional offers are where offers to purchase a property are subject to certain conditions being met. This means that if the conditions cannot be satisfied, then the parties have the ability to cancel the agreement and the transaction will not proceed.

Once a conditional offer is accepted by the vendor, the purchaser is given an agreed period of time (for example 10 working days) to satisfy the relevant conditions. Once the conditions are satisfied, the purchaser (usually through their legal representative) will notify the vendor and their agent that the condition has been satisfied. Once all conditions are met (there are usually more than one), the transaction will go unconditional and will proceed to completion and settlement.  

Common examples of conditions include:

• obtaining a satisfactory builder’s report for the property, 
• receiving confirmation of insurance for the property, 
• review and approval of title to the property, 
• receiving a satisfactory LIM report from the local Council for the property, 
• obtaining an unconditional offer of finance to purchase the particular property.

Completing all this due diligence before submitting an offer can incur a lot of expenses especially if acceptable reports have not been made available by the vendor.  Accordingly, often purchasers will submit a conditional offer to ensure that they only incur these expenses once their offer is accepted. 

Unconditional Offers

Unconditional offers are where the offer to purchase a property is submitted without being subject to any conditions. This means the offer would not be subject to any timeframes or conditions to carry out any checks and due diligence. 

If an unconditional offer is submitted and the vendor accepts it, the purchaser must proceed with the purchase.  If a purchaser is considering putting in an unconditional offer, it is highly recommended that they complete their due diligence beforehand.

A situation whereby a purchaser must enter into an unconditional agreement is when the property is sold by auction.  Accordingly, a purchaser must ensure that they are able to submit an unconditional offer (for example not having only conditional finance approval) before bidding on a property at an auction.

For more information about recommended due diligence please refer to our article linked here. 

If you’re purchasing a property and unsure about what kind of offer to make, it is important to reach out to an experienced conveyancing professional or property lawyer to assist you.

Rainey Collins offer Free 30 Minute Free Property Consultations for First Home Buyers to go through the process of buying a property.  For more information and to book a consultation, please click here. 

Laurie Pallett and Raiyan Azmi