A common question that sellers ask is “how often do conditional offers fall through”? It really depends on a number of factors. Here is a list of common conditions in the city of Toronto. Note, there is a very important “key point” at the end of this blog that must be kept in mind at all times.
- Home Inspection (common for houses, very rare for condos as these are, for the most part, newer builds versus a home built at the turn of the last century)
- Mortgage Financing
- Status Certificate Review (condo only)
- Unprofessional Realtors
Why Do Conditional Offers Fall Through?
1. Home Inspection:
If the owner has been on top of maintenance and truthful with the state of repairs then there should be no “surprises” found in the home inspection. (note, when we list a property we always do a pre-list home inspection to ensure we are working with all of the necessary information and helping ensure that there is no condition of home inspection in any offer). Some realtors use this condition as a scapegoat to exit a deal. So, the answer to this one? It’s unlikely that the deal will fall through if the home has been kept in good repair, and a pre-list home inspection has been completed prior to going to market. Funny enough, very few agents go the extra mile to have a pre-list home inspection in place, thus they can jeopardize the seller’s deal.
2. Mortgage Financing:
There is where some complications outside of the seller’s control or knowledge can come into play. The buyer and their agent may or may not have done their due diligence before making an offer. Frankly, there are a lot of realtors that do now have their buyers get pre-approved for a mortgage. Without a pre-approval, in place, the buyer and their agent have no idea what they can afford and then the buyer’s financing falls through. Clearly, this could become an issue for the seller. As listing agents, we always ask the buyer agent for full discloser and due diligence questions to ensure our sellers are best protected.
3. Status Certificate Review:
This condition is only for condos. It’s another case of the seller should know the pertinent details of the condo board, rules and finances. So, no surprises should arise. As listing agents, we also call the property manager to have a clear picture of any current or potential issues that may be on the horizon. Also, we order a status certificate ahead of time to better ensure NO offer comes in with a condition on Status Review.
4. Unprofessional Realtors
It’s unfortunate that this needs to be started. However, there are a lot of realtors who simply do not have the skills, dedication, work ethic and ethics to do their jobs professionally. Some realtors lack the commitment and skills that clients require. Frankly, this happens far more than you can imagine. Unfortunately, we see this happen in other deals. It’s shocking and an unnecessary stress for buyers and sellers. This is an easy fix, hire professionals who genuinely know what they are doing and truly care for their client’s success and happiness.
To learn more about what makes a good realtor check out this post.
Key Point on Why Conditional Offers Fall Through:
This is the most important point to consider as a concern or stress hinges on this:
Does the party holding the ability to waive or fulfill the condition want to get out of the deal?
If the answer is “no” then the deal should firm up! All eager parties find a way to get deals done. Period.
If the answer is “yes” then they will escape the deal, whether or not there is an issue in the home inspection report, financing or status. It may not be fair or even honest in some cases but if the seller or buyer has cold feet then they can get out of the deal without much of an explanation.
This is all the more reason to hire a pro who knows their client’s needs and wants and can navigate any issues that arise. If the market balances and softens, this professionalism will save clients money, deals and a whole lot of stress!
How often do conditional offers fall through? It depends on the skills of the realtors, the interest the buyer and seller have in the property deal being completed. It’s much more common with agents who are less adept and skilled and the types of buyers and sellers that they attract and choose to work with.
