Subject to Sale Offer: What Are They & Why Are They Working?
When the market was at its peak, receiving an offer with a Subject to Sale would make listing agents and Sellers think twice before accepting this offer but times have changed. However in this current market, subject to sale offers are working. In a ‘Seller’s Market’ these offers were less likely to be accepted when in competition with other offers but in a ‘Buyer’s Market’ these offers can work well for both parties.
So what is a Subject to Sale offer?
First, let’s define what a Subject is.
Subjects are ‘conditions in a Contract of Purchase and Sale that must be fulfilled in order for the sale to go through.’ Real Estate contracts have subjects for a few different reasons but the most typical subjects allow Buyers to do their due diligence on the home prior to purchasing. This may be in the form of a home inspection, getting their financing secured or gathering documents such as strata documents (if applicable).
A Subject to Sale is another clause the Buyer may use. This subject means that the Seller will give you a chance to sell your property by a certain date (usually around a month). However, if the Seller’s receives another offer, then they can force you to decide if you’re going to go ahead and purchase their property (even if your property hasn’t sold) or the deal will terminate.
Why may a Buyer submit a Subject to Sale Offer?
In many cases, it helps the Buyer line up their financing and moving dates to work with their old home and the new home. A common concern is buying a new home, then not being able to sell yours which can put you in a tricky situation. A Subject to Sale helps alleviate that risk. However, in a busy market with lots of Buyers, a Seller may be less likely to accept this type of offer.
Why May A Seller Accept A Subject To Sale Offer?
If their home has been on the market for a while then it could be beneficial to secure an Accepted Offer from an interested Buyer, which would make the Buyer focus on your home rather than continuing to look at others.
So Why Are Subject to Sales Working In This Market?
We recently submitted a Subject to Sale offer for our client and had great success! Currently in Vancouver, we are in a Buyer’s market, which means supply is exceeding demand allowing purchasers the advantage to negotiate with Sellers. Our clients put a Subject to Sale offer on a house they fell in love with but felt with their personal situation they needed to sell their home before buying a new one.
So we submitted the Subject to Sale offer, it was accepted so we quickly got their home ready for sale and put it on the market. However, there are a few key takeaways from the success of this Subject to Sale.
Firstly, we moved quickly. Subject to Sales are time sensitive so ensure that when you’re submitting the offer that you will be prepared for a quick turnaround.
Secondly, we staged the home, made sure it was clean and in top condition so that it presented well to potential Buyers. This also helps Sellers receive a better price for the home and allows for Buyers the ability to see how their furniture will fit in the space and picture their own life there.
Thirdly, be realistic about price and the condition of your home. With a subject to sale, you don’t have time to be over priced so going in with a realistic mindset is key.
With our Subject to Sale property, we priced it right, staged the home, ensured it was clean and moved quickly which allowed us to sell their home in a week and a half. Our clients sold their home then the Subject to Sale clause was removed and they are now the proud owners of a new home!
Make sure you speak to your Realtor to see if a Subject to Sale is the right option for your personal situation. Having a strong negotiator on your side and a clear strategy will help you be successful (that’s where we come in)!