Nobody ever asked what ‘sold conditional’ meant when it came to real estate in the late 2016-2017 market ‘spike’ — that’s because virtually every property was being sold ‘firm’ with no conditions.
Now that sales have eased a bit from the peak, and properties are taking almost a month to sell in most places, buyers are wondering why they’re being told that a property they see on a website such as Realtor.ca, or even on an MLS tool like the Toronto Real Estate Board’s “Collaborate” system is not available.
Logically, if a buyer sees a property for sale, shouldn’t it be available to look at, and to put an offer on if they wanted to?
This is where I introduce you to the real estate market’s ‘sold conditional’ status, and what it means when you’re a buyer.
When a property is listed for sale, there are four possible outcomes that can occur.
- It can sell, FIRM, with no conditions.
- It can sell, CONDITIONALLY, and I’ll explain that a bit later.
- It can be suspended.
- It can be terminated and taken off the market completely.
First of all, what are “conditions?”
When you buy a home, your real estate agent can include conditions on your offer such as the condition of being able to secure financing, condition upon a successful inspection of the home, a condition on the receipt and review of the status certificate — and so forth.
A conditional offer means you, as a buyer, have not committed to a firm and irrevocable purchase of the property, but are allowed to satisfy the conditions you’ve included in the offer. If you satisfy the conditions, you have the option to proceed and firm up the purchase. If you do not successfully satisfy the conditions, you can back out and get your deposit back. Conditions are typically included for the benefit of the buyer.
A seller would love nothing more than to accept a firm offer — which essentially means an offer with no conditions whatsoever. Accepting a firm offer means the property is sold, and all that has to happen is the completion of the transaction.
When a seller receives a conditional offer, and accepts it, the property becomes ‘sold conditional’ (or sold conditionally — if you prefer proper grammar).
Depending on what conditions are included in the offer, the conditional period could range from one day to two weeks — but typically financing and inspection conditions are set for five banking days.
The biggest frustration buyers face is that they can’t tell whether or not a property is sold conditionally. On the MLS, you’ll still see the property as available, and you might approach your real estate agent asking for more info or to see the property.
When they tell you it’s been sold conditionally, chances are it has been sold conditionally. Nope, they’re not being lazy. There’s no conspiracy happening and preventing you from seeing the property. The property has simply been sold conditionally.
Some buyers are so eager to see a particular property that they desire, in spite of it being sold conditionally, to see the property anyway. In today’s market, the chances of a property becoming available again due to conditions not being fulfilled are minimal.
There are instances where a buyer may not be able to obtain financing, or they might have found an issue with the property that causes them to back out, or perhaps a status certificate for a condo purchase reveals an issue with the condominium corporation.
More often than not, sales go through so it’s not really worth having a look at properties that have been sold conditionally.
If the seller’s real estate agent indicates that there may be a possibility of a deal falling through, buyers have the ability to make an offer. But we’ll talk about how to do that another time.