Seller’s Conditions: What Are They? And Why I Love Negotiating Them
Imagine you want to buy a house, but you’re terrified of selling your place first and then becoming homeless (because you haven’t found your dream home yet).
Bad situation, right?
Wrong. “Seller’s condition” for the win!
Have you heard of a seller’s condition? I mean, buyers have them all the time, right? Why can’t we have say & freedom as sellers of Calgary homes?
The Seller’s Condition Definition
Firstly, what is a condition of a real estate purchase contract, and how is it different from a term?
Well, the way I explain it to my greater Calgary home selling clients, is that terms are things that happen with a sale, whereas conditions are things that have to happen for the sale itself to happen.
Example of a term: “Buyers to buy the sellers a bottle of wine, and deliver it personally, on a pony, upon closing.”
Example of a condition: “Seller condition: This contract is subject to the seller’s satisfaction with the quality of a bottle of wine, given to them by the buyers, and delivered by pony, by 9:00 pm on December 1.”
A buyer’s condition is a legal way for the buyer to leave the purchase contract.
In other words, we have arrived at the definition: A seller’s condition is something that needs to be satisfied by a certain date and time in order for the offer to proceed.
When to Negotiate a Seller’s Condition
I am a
specialist listing/selling agent for Calgary & Area (all I do is sell homes), so this really is my area.
Here’s what I know…
Buyer’s conditions are common - a financing condition and a home inspection condition are the most common. So when would a seller need a condition (a legal way out of the contract)?
The most common seller’s condition that I recommend to my clients is a way for the sellers to leave the contract legally if they don’t find another home to buy or rent. There are many ways to write this condition, but I use the following verbiage: “Subject to the sellers finding suitable accommodation of their choosing by such and such time and date”. I like this verbiage because it is vague enough that it gives the seller the option to cancel the contract legally if they don’t find a house to buy, but they could also cancel the contract if they can’t find a rental property. They aren’t committing to having to buy another home.
I find that seller conditions aren’t a well-known option for the public. Most sellers I speak with about it are learning about it for the first time.
One thing is for sure - my clients feel a lot more comfortable with it in the contract. It brings down their stress knowing that they don’t have to sell their home if they don’t have a home they want to buy yet.
I generally find that buyers are fine with adding this condition into our contracts, especially if we set it for the same length of time as their buyer conditions (2 weeks) because they are busy working through their own conditions anyway. More often than not, though, we set this condition for 4-6 weeks and the buyer agrees. And since it is a condition, then if my seller clients don’t find a house to buy in that timeframe, then we can always ask for an extension to our deadline. If the buyers don’t agree to an extension, then we collapse the contract and sell the house to the next buyer.
Feel peace of mind signing your purchasing contract
Why I Love Seller’s Conditions
I love negotiating these conditions into purchase contracts for my seller clients because it gives us negotiating power down the road if we need it. For example with the condition for a seller needing to find suitable accommodation, if a seller says there is no way they would want to cancel the contract as they are definitely going to sell, it can still be helpful to have this condition in our purchase contract in case we need to move the possession date.
For example, say my seller clients go to buy another home and discover that the sellers of that home need to have a possession date of 60 days from now. In this example, say that our possession day on the sale of their home is set for 45 days. Ideally, as sellers, my clients would want to take possession of their new home before they have to move out of their current home, and they likely don’t want to carry two properties (called bridge financing). In this case, if we have a seller’s condition, then we can go to the buyers of their home and ask them to move the possession day to something like 63 days away so that my clients can move into their new home before having to leave their current home. This is much more reasonable. And if the buyers of their home don’t agree, then my clients can cancel the contract legally and they don’t get sued. I have not had to do this often, but when we have, the buyers always agree because they don’t want the contract to be canceled and lose the house. See how that works?
Another example is a legal review whereby the seller’s lawyer has an opportunity to review the purchase contract before the sellers have to agree to continue with the contract in case there is something special or more complicated in the offer than a standard offer. That way, if the lawyer recommends that the sellers add something to the contract, then they can ask the buyers to add it in and if the buyers don’t agree, then the sellers can cancel the contract and walk away.
Some situations when I would recommend adding a legal review condition are: divorce, estate sale, and complicated contracts if there is something listed on the property title that needs to be removed prior to selling the home.
My job is to protect my clients as best I can and make sure they have the proper conditions in a purchase contract so they have a way out if they need it. It is essential that we think of every angle.
Have you ever had to use a seller’s condition in a real estate contract? What was your experience?
Make sure you are covered!
Thank you for reading - I hope this was helpful. Of course, every circumstance is different, so to discuss your needs, please reach out. As you can see, we really care and I’m a specialist listing agent.
Do you have a home in the Calgary area and looking to sell? Work with Breanna! Call us at (587) 700-7123 or check out what she can do at https://ateamcalgary.ca/sellers
>>Click the purple button to receive articles to your email!>>