Disclosure of Accepted Conditional Offers

 

Sellers often accept conditional offers. A conditional offer sets out the terms of the proposed sale such as the purchase price, the date of closing, the names of the parties, and the amount of any required deposit, but it also includes conditions that must be met within a specified period of time in order for the contract to be binding on the parties. These conditions could include satisfactory mortgage financing, satisfactory home inspection, or sale of the buyer’s home. Accepted conditional offers do not always become binding contracts as the buyer may be unable to satisfy conditions.

When a seller accepts a conditional offer, they have to decide if they want to disclose the existence of the accepted conditional offer to other potential buyers. Buyers have to decide if they wish to view properties even though they may not be able to determine if the seller has accepted a conditional offer.

There are implications for both sellers and prospective buyers. Discuss your options with your real estate professional before proceeding.

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+ Sellers

After you accept a conditional offer, you must decide if you will disclose that fact to other potential buyers. It is your choice whether to disclose, your real estate representative must follow your lawful instructions regarding disclosure.

  • If you disclose:
    • For a period of time, your property may not show as “active” in property listings databases.
    • There will be a decrease in viewings and interest in your property.
    • There is no guarantee the conditionally accepted offer will close, the buyer may be unable to satisfy or waive conditions and the offer may collapse.
    • In the event that happens, you may have missed out on potential viewings/interest because you disclosed the existence of an accepted conditional offer.
  • If you don’t disclose:
    • If you instruct your real estate professional not to disclose the existence of an accepted conditional offer, your real estate professional cannot be dishonest to potential buyers and their representatives.
    • If a potential buyer or real estate professional asks your real estate representative if you have accepted a conditional offer, your real estate representative will have to respond that the seller (you) has instructed them not to disclose if there is an accepted conditional offer – they cannot say “no” if the reality is “yes” – your representative will typically respond, “My client has instructed not to answer questions regarding the current status of any offers.”
    • Potential buyers will have to decide if they want to view your property without being able to confirm if there is already an accepted conditional offer.
    • It is possible you could have fewer viewings or less interest from buyers as a result.

+ Buyers

As you are viewing properties, you may come across some where the seller has disclosed the existence of a conditional offer and you may come across some where you are unable to determine with certainty if there is an accepted conditional offer. It is up to you whether you want to view those properties.

  • When you find a property you want to view, your real estate professional should ask the seller’s representative about the status of the property – they should ask a direct question: is there an accepted conditional offer on this property?
  • Seller’s real estate representatives can’t lie to you or your real estate professional, however they must follow the lawful instructions of the seller
    • The seller’s agent may say yes, there is an accepted conditional offer on this property.
    • The seller’s agent may say no, there is no accepted conditional offer on this property. Remember that the seller’s agent cannot lie. If they indicate there is no accepted conditional offer on the property, then there isn’t one. However, that answer only applies at the time you ask the question. If you come back and draft an offer later, the seller’s representative is under no obligation to advise you or your representative that the status of the property has changed unless the seller has instructed them to do so – in a brisk market that status may change quickly; often in a matter of minutes or hours.
    • The seller’s representative may say, my seller has instructed me to neither confirm nor deny the existence of an accepted conditional offer. In this case, you have to decide if you’re willing to view a property that may be the subject already of an accepted conditional offer.
    • The seller’s representative may simply not respond to your representative’s inquiry about the property’s status. Again, in this case, you must decide if you’re willing to view the property in the absence of a response.

It’s completely the seller’s choice whether to disclose if their property is the subject of an accepted conditional offer. The seller’s real estate representative must follow the lawful instructions of their client, the seller. It is also completely the buyer’s choice whether they want to view properties that may already be the subject of an accepted conditional offer.

Remember, too, that not all conditional offers become finalized. Sometimes, the buyer doesn’t waive or satisfy conditions in which case the property could become available again.

 

 

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