A conditional offer is the most common type of offer in Ontario residential real estate. Most buyers — particularly first-time buyers and anyone requiring mortgage financing — submit offers conditional on financing approval and home inspection. As a seller, accepting a conditional offer means your sale isn't certain until all conditions are fulfilled or waived. Whether to accept a conditional offer, counter to remove conditions, or hold out for a firm offer depends on several factors: the conditions themselves, the price premium (if any) over alternative offers, current market conditions, and your own timeline and risk tolerance.
What Makes a Conditional Offer Risky
A conditional offer that doesn't go firm is worse than not having accepted an offer at all — you've lost time, momentum, and potentially competing buyers while the condition was open. When a financing condition fails after a few weeks, you relist into a market where buyers wonder why the deal fell through. Listing agents must be transparent about failed conditions, and some buyers interpret them as signals of property issues (even when the issue was purely the buyer's financing).
The practical risks of a failed conditional deal:
- 2–5 weeks of additional carrying costs (mortgage, property tax, utilities)
- Loss of offer-period buyer momentum — competing buyers who didn't get the property have moved on
- "Why didn't it sell?" skepticism in any subsequent listing
- Emotional exhaustion from preparing for a sale that didn't close
Evaluating the Financing Condition
A financing condition typically gives the buyer 5 business days to confirm mortgage approval. The condition fails if the buyer's lender declines the application within that period.
Signals that a financing condition is lower risk:
- Buyer has a written pre-approval letter (not just a pre-qualification)
- Large deposit ($30,000+ on a $700,000 purchase) signals financial strength
- Buyer's agent is experienced and confirms the buyer is well-qualified
- Purchase price is well within typical LTV ratios for the property value — no unusual financing required
Signals the condition carries more risk:
- First-time buyer without confirmed pre-approval
- Minimum deposit
- Purchase price at the limit of what CMHC's stress test allows for the buyer's stated income
- Self-employed buyer (more complex mortgage documentation)
Evaluating the Home Inspection Condition
A home inspection condition gives the buyer 3–5 business days to have the property professionally inspected. The buyer can then:
- Waive the condition (deal proceeds)
- Request a price reduction or repair credit
- Exit the deal if the inspection reveals serious issues
For a well-maintained property where you're confident in the condition, an inspection condition is relatively low risk. A home with known issues — aging mechanical systems, deferred maintenance, a roof at end of life — has higher risk that the inspection produces adjustment requests or deal termination.
Consider doing a pre-listing home inspection ($400–$600) and addressing significant issues before listing. Buyers who see a pre-listing inspection may be more willing to waive their own inspection condition or go in with less uncertainty.
When to Push for Firm
In a strong seller's market with multiple competing offers, you have more leverage to request that buyers go firm or offer a meaningful price premium for conditions. If one competing offer is firm at $950,000 and another is conditional at $960,000, the $10,000 premium for the conditional offer may not justify the risk — many sellers in this situation would take the firm offer.
In a balanced or buyer's market, demanding a firm offer may mean no offer at all — most buyers in softer markets will not waive conditions. Evaluate what the current market supports, not what worked in 2021.
The "Seller's Market" Exception
In a competitive seller's market, buyers sometimes offer firm — no conditions — to be competitive. This creates its own risk for buyers (they're removing their protection), but it shifts risk away from sellers. If your property is attracting firm offers alongside conditional ones, comparing them carefully becomes the right approach. See our guide on how to compare competing offers.
Conditional Offers in Practice
The majority of Ontario home sales involve at least one condition — typically financing. The existence of a condition doesn't make an offer bad; it's a standard feature of residential real estate transactions. The question is always whether the condition risk is priced appropriately into the offer and whether the buyer's profile suggests the condition is likely to be satisfied.
Your listing agent is your most important resource in assessing conditional offer risk. An agent who has dealt with financing conditions on dozens of transactions will have insight into which buyer profiles and market conditions produce more failures — and can help you decide whether the premium on a conditional offer is worth the uncertainty.
Understanding the difference between price and terms in a real estate offer provides the broader framework for this evaluation.
FAQ
Can I continue showing the property after accepting a conditional offer?
Standard practice in Ontario is to take the property off the market (suspend showings) during the condition period. However, your listing agreement and APS can include provisions for continued showings or a "right of first refusal" clause (where you can require the first buyer to waive their conditions if a better offer comes in). Discuss these clauses with your agent before listing if this situation concerns you.
What happens to the deposit if the buyer backs out on a condition?
If the buyer exercises their condition (legitimately — the condition wasn't satisfied), the deposit is returned to them. You receive nothing for the time the property was off market. This is why assessing condition risk before accepting matters — the cost of a failed conditional deal is your carrying costs and opportunity costs during the condition period.
Can I require a larger deposit to reduce my risk on a conditional offer?
You can sign back an offer requesting a larger deposit. Larger deposits don't eliminate the buyer's right to exercise a legitimate condition — the deposit is still returned if conditions aren't satisfied. But a larger deposit does signal buyer seriousness and financial strength, and if the buyer defaults after the deal goes firm (conditions waived), the larger deposit provides more financial protection for you.
How long is a typical condition period for a financing condition in Ontario?
Five business days is the standard financing condition period in GTA residential transactions. Some buyers request 7–10 business days if their financing situation is complex (self-employed, unusual property type, high-ratio mortgage). The longer the condition period, the longer your property is effectively off market with uncertain outcome. You can sign back to reduce an extended condition period.
Is a home inspection condition becoming less common in the GTA?
In competitive seller's markets (2020–2022 in the GTA), buyers routinely waived home inspection conditions to be competitive. In 2024–2025's more balanced market, inspection conditions have returned as standard practice for many buyers. The prevalence of inspection conditions tracks closely with market competitiveness — more competitive markets see more buyers waiving conditions; softer markets see conditions return as standard.