Toronto’s real estate market has been a seller’s market for a long time. Even when the market ebbs and flows, as sometimes happen, we remain in a seller’s market.

Seller’s markets occur when demand outweighs supply. In these markets, conditional offers are rare because conditions favour buyers.

Most homes sell with “firm” offers. A firm offer means that neither party can get out of the deal after signing. Every so often, even in a seller’s market, a buyer may win an offer with a condition. This is a rare occurrence, and if you are the lucky buyer with a condition, you should treat it as a gift. Because conditional offers are so unusual, most buyers and sellers don’t know how to handle them.

Here’s our guide to real estate conditional offers:

First: What is a conditional offer? A conditional offer is an offer that one party, usually the buyer, can withdraw from within a specific timeline. The seller can’t sell the house to anyone else during that time. Typically, these conditions expire within three to five days, and the right to pull out of the deal is at the buyer’s discretion.

Second: What are conditions? Conditions can be anything that a buyer dreams up, but there are four most common conditions that we see:

  1. Home inspection: This gives the buyer typically three days to inspect the home with a home inspector of their choice. If the home inspection shows something that makes the buyer not want the house anymore, they have the right to get out of the deal with no penalty.

  2. Financing: This allows the buyer to get a firm commitment from their bank before they are fully committed to the deal. If something comes out about their financial situation that makes financing difficult, the buyer can get out of the agreement. The financing clause also covers you if the bank’s appraisal is lower than what you paid for the property. The bank appraises most properties that it finances to make sure you haven’t over-paid. If the bank disagrees with your price, they may loan you less money than expected.

  3. Status certificate: This is used only when buying a condo and is the most common condition. A status certificate is a document that details, among other things, the financial health of the condo corporation you are buying into. Buyers must review this document before purchasing a condo, and ideally, they should check this with a lawyer. The buyer should know if negative things about the condo, such as insufficient reserve funds or pending lawsuits.

  4. Insurance: It is important to ensure you can get financing on the house you purchase. Most homes can be insured with no problem, but there are some items in houses that make insurance difficult. These can include knob and tube wiring, KITEC plumbing, mould, or Insulbrick. Also, if the house needs a lot of renovations and is not “liveable,” you will need to get special, more expensive insurance.


➤ Interested in conditional offers? Here are some other related topics you might be interested in:


Conditions give buyers a few days for due diligence on the property they want to buy. In a very tight market, the buyer normally does this due diligence up front before offering.

That means, they get pre-approved with the bank, they do a pre-offer home inspection (or review the home inspection that the seller provides), they review the status certificate in advance (assuming the seller ordered it already), and they call their home insurance company to make sure the home is insurable.

So, this due diligence almost always gets done in advance of the offer night if a buyer wants to make a firm offer. The conditional period just gives the buyer some more breathing room.

If you are a seller and you find yourself in the position of accepting a conditional offer, don’t panic. Sellers often view these conditions as the kiss of death, but they’re not. The buyer offering on your property really wants to buy it. Let them do their due diligence and the chances are good that the sale will still firm up.

If you are a buyer and you are fortunate enough to buy a home with a conditional offer, rejoice! Take the time to call your bank, lawyer, home inspector and home insurer. Take a big breath and know that you’re one of the lucky few to get this extra time.

As always, Stay safe
Robyn VanderVennen