diff --git a/custom_components/localthings/observe.py b/custom_components/localthings/observe.py
index 7d51109..ca13ce0 100644
--- a/custom_components/localthings/observe.py
+++ b/custom_components/localthings/observe.py
@@ -73,6 +73,9 @@ class ObserveManager:
         self.subscribed_hrefs: set[str] = set()
         self._notified: set[str] = set()
         self._last_notify_ts: float | None = None
+        # Wakes try_enter_observe_mode's grace wait early once enough hrefs
+        # have notified. Guards only `_notified` mutations + the `wait_for`.
+        self._notify_cond = threading.Condition()
         self.fallback_hrefs: set[str] = set()
         self._refresh_task: ObserveRefreshTask | None = None
         self._refresh_stop: threading.Event | None = None
@@ -147,8 +150,10 @@ class ObserveManager:
             return
         if not isinstance(rep, dict):
             return
-        self._notified.add(href)
-        self._last_notify_ts = time.monotonic()
+        with self._notify_cond:
+            self._notified.add(href)
+            self._last_notify_ts = time.monotonic()
+            self._notify_cond.notify_all()
         self.log.debug("observe notify: %s", href)
         self.apply(href, rep, source='observe')
 
@@ -172,10 +177,12 @@ class ObserveManager:
         grace_period_s: float = GRACE_PERIOD_S,
         success_fraction: float = SUCCESS_FRACTION,
     ) -> bool:
-        """Blocking — subscribes to every href then sleeps for the whole
-        grace period. Caller must run this in an executor, never on the
+        """Blocking — subscribes to every href then waits up to
+        `grace_period_s`, returning early once `success_fraction` of hrefs
+        have notified. Caller must run this in an executor, never on the
         event loop."""
-        self._notified.clear()
+        with self._notify_cond:
+            self._notified.clear()
         subscribed: set[str] = set()
         for href in hrefs:
             segs = [s for s in href.strip('/').split('/') if s]
@@ -190,10 +197,18 @@ class ObserveManager:
             self.subscribed_hrefs = set()
             return False
 
-        time.sleep(grace_period_s)
+        def _fraction_reached() -> bool:
+            return (
+                len(set(self._notified) & subscribed) / len(subscribed)
+                >= success_fraction
+            )
 
-        fraction = len(set(self._notified) & subscribed) / len(subscribed)
-        if fraction >= success_fraction:
+        with self._notify_cond:
+            reached = self._notify_cond.wait_for(
+                _fraction_reached, timeout=grace_period_s,
+            )
+
+        if reached:
             self.subscribed_hrefs = subscribed
             self._set_mode(MODE_OBSERVE)
             self.start_refresh_task(session)
diff --git a/tests/localthings/test_observe.py b/tests/localthings/test_observe.py
index 4ea057d..1a87724 100644
--- a/tests/localthings/test_observe.py
+++ b/tests/localthings/test_observe.py
@@ -452,3 +452,71 @@ def test_downgrade_to_poll_stops_refresh_task():
 
     assert not thread.is_alive()
     assert mgr._refresh_thread is None
+
+
+def test_try_enter_observe_mode_exits_early_when_fraction_reached():
+    """The grace wait returns as soon as enough hrefs notify, not after the
+    whole grace ceiling. Production data (fridge TP2X_REF_20K, 2026-07-30):
+    all subscribed hrefs notify within ~0.34s of subscribe, yet the old fixed
+    time.sleep(15) waited the remaining ~14.6s anyway — every successful
+    first-refresh / observe-retry fetch paid that dead time."""
+    mgr = _manager()
+    session = _FakeSession()
+    hrefs = ['/a/vs/0', '/b/vs/0']
+
+    def _notify_after_subscribe():
+        # Let try_enter clear _notified + subscribe first (matches the existing
+        # test pattern's 0.005 lead), then notify well before the 2s ceiling.
+        time.sleep(0.01)
+        for href in hrefs:
+            mgr.on_notification(href, cbor2.dumps({'x': 1}))
+
+    notifier = threading.Thread(target=_notify_after_subscribe, daemon=True)
+    notifier.start()
+
+    try:
+        t0 = time.monotonic()
+        entered = mgr.try_enter_observe_mode(session, hrefs, grace_period_s=2.0)
+        elapsed = time.monotonic() - t0
+        notifier.join()
+
+        assert entered is True
+        assert mgr.mode == 'observe'
+        # Early exit: returns near the notify (~0.01s), not the 2.0s ceiling.
+        # The old fixed sleep would make this >= 2.0.
+        assert elapsed < 0.5
+    finally:
+        mgr.close()
+
+
+def test_try_enter_observe_mode_waits_full_ceiling_when_fraction_not_reached():
+    """Early-exit must NOT fire below the success fraction. A partial set of
+    notifies that doesn't meet the threshold waits the full grace ceiling,
+    then falls back to poll — identical to the old fixed sleep. Guards
+    against an over-eager predicate that enters observe on too few notifies."""
+    mgr = _manager()
+    session = _FakeSession()
+    hrefs = ['/a/vs/0', '/b/vs/0', '/c/vs/0', '/d/vs/0']  # 4 hrefs
+
+    def _notify_one():
+        time.sleep(0.01)
+        mgr.on_notification(hrefs[0], cbor2.dumps({'x': 1}))  # 1/4 = 0.25
+
+    notifier = threading.Thread(target=_notify_one, daemon=True)
+    notifier.start()
+
+    try:
+        t0 = time.monotonic()
+        entered = mgr.try_enter_observe_mode(
+            session, hrefs, grace_period_s=0.2, success_fraction=0.8,
+        )
+        elapsed = time.monotonic() - t0
+        notifier.join()
+
+        assert entered is False
+        assert mgr.mode == 'poll'
+        assert mgr.subscribed_hrefs == set()
+        # Waited the full 0.2s ceiling (1/4 = 0.25 < 0.8); did not early-exit.
+        assert elapsed >= 0.18
+    finally:
+        mgr.close()