Subject to Sale Explained

A ‘subject to sale’ is when a buyer makes an offer that is dependent on selling their own home.

If the seller accepts the conditional offer the pair typically thrash out a timeframe in which the potential buyer needs to sell their property, or alternatively arrange another way to finance the purchase.

Giving notice if another good offer arrives

If you as the seller accept a subject to sale what happens if another buyer comes in with a good offer?

It’s normal to include a clause where if you get another acceptable offer you give the buyer with the agreement notice – typically between 24 and 72 hours. They then need to pay the agreed price in that timeframe or walk away and let you sell to somebody else.

When subject to sales are likely to occur

Subject to sales are more likely to be offered and accepted in a buyers’ market, or when the property has been on the market for some time.

In both situations there’s likely to be minimal competition, so it could be worth the wait when making a sale.

In a competitive market however you as the seller are more are more likely to lose out on a higher offer by accepting a subject to sale offer, so making such an agreement is rarer.

You may also want to sell the property quickly, in which case such a proposal isn’t that attractive.

Accepting an offer conditional on another sale is something you should discuss with your representative and not take lightly – it’s a big decision, while the wording of the clause needs to be scrutinised to make sure it checks out.

Other ‘subjects’

A subject to sale isn’t the only condition that can stand between an offer and the sale going through.

Most offers are subject to a property inspection in case there are hidden defects – if there’s asbestos in the property that can impact its value and is therefore grounds to renegotiate the price.

Similarly, it’s normal for the offer to be subject to title search, which clarifies that the seller is the legal owner of the property.

Offers can also be subject to securing mortgage finance, though a clued up buyer may have that lined up beforehand.

You can also get more unusual conditional offers. For example, an offer could depend on being approved for a building permit if the buyer wants to renovate the property or build an extension.

No two purchases are exactly alike. If you find yourself in a situation described above, be sure to consult your real estate professional.

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