Should People Sign Unconditional Contracts in Investments?

Image of a lawyer reading documents at Bickell & Mackenzie, Redland Bay, accompanying the article titled "Should People Sign Unconditional Contracts in Investments?"

There are instances where investors have to choose between signing or declining a contract due to unconditional offers. Although some unconditional offers end up beneficial, they are almost always sketchy and hinder investors from obtaining equal or favourable terms for their offer. But should people sign unconditional contracts when investing? Here are some points to consider.

What is an Unconditional Offer?

An unconditional offer is a contract that an unconditional contract contains no conditional clauses – meaning outside of a Buyer’s right under the legislation, the buyer must settle the property regardless of whether their finance is approved or not and whether the physical condition of the Property is acceptable or not. Unconditional offers are often the domain of brokers, builders or portfolio investors who can leverage more financial power and take on higher levels of risk.

Should People Sign Unconditional Offers?

There are some instances where signing an unconditional offer can help investors obtain an investment at a bargain. When the market is scorching or approaching an all-time high, an investor can sometimes obtain an offer they would not usually achieve otherwise.

However, there are some instances in which investors should never sign an unconditional offer. Do not sign an unconditional offer if certain aspects are not disclosed that pertain to the investment’s integrity or actual value. The unconditional contract can seem like your about to procure an investment at a bargain, however, there could very well be future issues that arise, in real estate for example – building and pest, or strctural problems, which could lead to the investor wanting to break the contract, unconditional offers, would not allow for this.

After the broker confirms the deal, it is best to get the maximum amount of money possible. It means it is best to be as firm as possible during negotiations. Trying to get out of the deal will jeopardise your chance to get the most out of the agreement.

How to Spot an Unconditional Offer

Unconditional offers tend to have a lot of red flags that people can easily spot. Here are some of the most common features that unconditional offers will have.

1. Soft Close

One of the biggest giveaways of an unconditional offer is a soft close. It means a deal has no expiration date and can be accepted using a smooth finish.

2. Unclear Terms

Unconditional offers will almost always have unclear terms that do not provide enough details. This way, investors will be forced to sign the offer without too many details, and there will be more room for the terms to change.

3. Undefined Terms

Often, investors will be given an option to customise some details concerning the offer. Many of these details are left undefined, and there is significant room for these to be changed in the future.

4. Incentive Terms

Contracts often will contain some sort of incentive for investors to get into the agreement. But unconditional offers will often make these terms seem unattractive by offering investors no incentive or a narrowly equal one concerning the investment.

Conclusion

Unconditional offers are almost always a bad idea to take on. They might seem like a great idea to get a deal quickly, but they will rarely be beneficial to the investor. When you come across an unconditional offer, the best thing to do is to walk away from it and wait for the next deal that is much better.

Bickell and Mackenzi is a group of conveyancing lawyers offering the best conveyancing services in Redlands. We also care of other legal issues such as conveyancing and property law. Book an appointment with us today and let us know how we can help.

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