Conditional Offer vs Unconditional Offer

A conditional offer is a sale and purchase agreement that includes one or more conditions that must be satisfied before the sale becomes binding. The most common conditions in New Zealand are: finance (your mortgage is approved), building inspection (a builder's report is satisfactory), LIM (the Land Information Memorandum is satisfactory), valuation (a registered valuation meets the purchase price), and solicitor's approval.

Each condition has a specified timeframe (typically 5-15 working days). If a condition is not satisfied by the deadline, the buyer can either cancel the agreement or request an extension. If the buyer cancels, they get their deposit back.

Conditions are your safety net. They give you time to uncover problems and a legal mechanism to walk away without penalty. Your lawyer should ensure the conditions are properly drafted and the timeframes are realistic for your situation.

An unconditional offer is an agreement with no conditions — it is immediately binding on both parties. The buyer has no right to cancel based on finance falling through, a bad building report, or any other issue discovered after signing.

In New Zealand, auction sales are always unconditional on the fall of the hammer. Outside of auctions, buyers sometimes choose to go unconditional to strengthen their offer in a competitive market (multi-offer situation). This is a high-risk strategy because if something goes wrong — your bank declines the loan, the building report reveals major defects — you are still legally obligated to settle.

If you cannot settle on an unconditional agreement, the seller can cancel the agreement, keep your deposit (typically 10% of the purchase price), and sue you for any further losses. The financial consequences can be devastating.

This is a choice you make for each offer. In most cases, a conditional offer is the prudent approach — it protects you against the most common risks. Going unconditional should only be considered when you have completed all due diligence in advance, have confirmed finance, and fully understand the risks.

Always start with a conditional offer unless you have specifically completed all due diligence and have confirmed finance. If you are in a multi-offer situation and considering going unconditional, talk to your lawyer first. They can advise you on the specific risks and whether there are alternative strategies (such as shorter condition periods or cash offers) that provide a better balance of competitiveness and protection.