House prices are rising, and with it are the increasing pressure on buyers. In an effort to speed up the home-buying process and secure their dream homes, many buyers are putting forward the option of an unconditional contract.
An unconditional contract is a contract where there are no conditions attached to the sale. This means that once the buyer signs the contract, both parties are legally obliged to follow through with the sale. Although this appears to be the best option to snatch up your dream home, there are many serious and considerable risks involved.
In this article, we outline the risks involved in unconditional contracts and how you can mitigate them so you don’t lock yourself into a contract you can’t get out of.
Over and under valuation
The buyer may overestimate the property’s value in a rush to secure it, and unintentionally spend more money than is fair. On the other hand, the vendor can undervalue the property value, thereby losing out on profit.
Before making an unconditional offer on a property, you as the buyer should perform thorough research by hiring a licensed valuer to accurately establish the property’s correct value.
A lack of a finance clause
The lack of a finance clause in an unconditional contract is an important consideration, especially for buyers who need to borrow money to complete the transaction. Lenders often won’t approve a loan, and since the payment is not conditional on the buyer’s ability to pay, buyers may be forced to forfeit the deposit.
If you’re considering making an unconditional offer, you should be confident that you will have the funds needed to settle the property, whether this is through personal resources or strong confidence in the ability to acquire a loan
Problems with the property
A big concern for unconditional agreements is if the buyer is unable to see the property for themselves. If during the contract term you find any deterioration issues with the property, you will not have the right to terminate the contract and must follow through with the transaction.
Due diligence is essential
We recommend conducting a thorough inspection of the property before putting forward an offer. This ensures that you uncover any unexpected damages or unseen maintenance issues which can be extremely costly down the track.
Don’t let time pressures get to you
Getting caught up in the whirlwind of the excitement of purchasing your dream home is not uncommon, and it often seems like a good idea to fast track the buying process so you can move in straight away.
Putting forward unconditional contracts has extreme ups and downs. Taking it slow and chatting through your options with a professional will greatly mitigate the stressors that accompany any property purchase.
Always seek out legal advice
Before you rush into any contract, we recommend always seeking out legal advice from an experienced lawyer.
At Cameron Rogers, our conveyancing team offer expert and tailored advice to your unique circumstances and goals, so your property journey is as seamless as possible.
Reach out to our team now on 07 5445 1213 or book a consultation.