Most buyers need to sell their own property whilst searching for their new one. In many cases they haven’t sold their home before they’ve found the upgrade and thus you’re looking at a “subject to sale” offer scenario.
Buying a property “subject to the sale of another property” is common and something most agents are well versed in.
Generally, these agreements enable the seller to continue to promote their property for sale and, in the event of receiving an alternate offer to purchase (normally not subject to the sale of that buyer’s property), give notice to the first buyer of their intention to proceed with the second offer after two business days.
This commonly used term ‘48 hour clause’ provides the buyer two business days to obtain an offer on their property or waive the benefit of the subject to sale condition.
Certainly, these arrangements can get complicated. Agents need to be especially careful not to prejudice the second party by giving the first buyer a hint that a second offer might be on the way. Notices served between the parties must also be technically compliant and strictly adhered to so as to not unfairly advantage either buyer.
A crucial point for sellers to be aware of is if they are accepting a ‘subject to sale’ offer, at say $600,000, this then binds them to that sale price within the 48 hour period – even if a second unconditional offer is higher (provided the original buyer can make their original offer unconditional within the 48 hour time frame).
How these offers can benefit the seller
Although this type of sale requires more effort, contracts for sale that include the ‘subject to sale’ condition, often succeed and proceed smoothly to settlement.
This type of sale also has the potential to put the seller at an advantage, with the buyer often expecting to pay a premium for the privilege and protection of settling after the sale of their own property.
Given the conditional nature of the sale, sellers are justified in asking for a higher price from the subject to sale offer. There have been instances where the seller rejected a ‘subject to sale’ offer at a premium price, only to have that same buyer return to the same property after they’ve sold and pay a lower price.
If you have any questions regarding Subject To Sale offers or just want to speak to someone about an appraisal or to sell your property, call our Naked Agents today!