Subject to Sale is a Bad Idea in This Market

Are you a buyer or a seller? Regardless this post will help you navigate a subject to sale offer. Firstly, in this hot sellers market there should be no reason for any seller to accept a subject to sale offer. However, I am still seeing it from time to time, usually on the poor advice of the selling Realtor.

The only time in my opinion to be accepting a subject to sale offer should be in a buyers market when the home has been sitting on the market for a long time. Basically a subject to sale offer is a buyer will make an offer on your property but the offer will be subject to that buyer being able to sell his home in order to purchase your home.

This subject locks up your property under contract and you could be in a situation where it takes months for that buyer to sell his home. Generally there is a date set out in the contract when the buyer needs to have their house sold by. For example here’s what the subject to sale would look like on a contract:

‘Subject to the Buyer entering into an unconditional agreement to sell the Buyer’s property at (address) by (specific date). This condition is for the sole benefit of the Buyer. However, if the Seller receives another reasonable offer on their property the Seller may deliver a written notice to the Buyer requiring the Buyer to remove all conditions from the contract within 72 hours of the delivery of the notice, not to include Sundays and Statutory Holidays. Should the Buyer fail to remove all the conditions before the expiry of the notice period, the contract will terminate.’

As you can see if the seller receives another offer from a different party they have the right to serve the subject to sale offer written notice asking them to remove that subject and purchase the home without it. The buyer can either accept that or the offer will terminate and the seller can the deal from the new buyer.

Subject to sale offer should rarely be considered by the seller. Unless the home has been sitting on the market for a long time or the offer price is substantially high that is generally the only time a subject to sale should be considered. For buyers offering this to the seller they need to understand for a seller to consider this offer the price will have to be much higher than a normal offer due to the unfavourable subject to sale.

 

6 COMMENTS


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