Selling Subject to Sale

Disclaimer: These comments are the writer’s own and do not necessarily reflect the current opinions and policies of the Real Estate Institute of Western Australia.

Buyers are often, of course, sellers too. Most people who decide to sell their home also look for an alternate property at the same time and often find something appealing before they have secured a buyer for their own.

Buying a property “subject to the sale of another property” is common and REIWA agents are well equipped to ensure the sale agreement is procedurally correct. Normally such 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 colloquially termed “48 hour clause” provides the subject sale buyer two business days to obtain an offer on their property or waive the benefit of the subject sale condition.

Certainly, these arrangements can get tricky. Agents need to be especially careful not to prejudice the second offerer 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.

Sellers ought to be mindful that sometimes in accepting a “subject to sale” offer at say $600,000 binds them to that sale price despite a second offer being unconditional and at $625,000 should the first buyer waive the subject sale condition within the two business day period allowable.

Some agents refuse to entertain presenting subject to sale offers to their vendors. Such an approach is, in my opinion, not in the best interests of the vendor.

Contracts for sale that include the “subject sale” condition often succeed and proceed smoothly to settlement and is normally worth the effort. The “subject sale” buyer normally expects to pay a premium for the privilege of being allowed to buy with the protection of only having to settle after the sale of their own property. And sellers are justified in asking for a little extra over an offer that is unconditional.

There are many instances where buyers not able to submit a “subject to sale” offer at a premium price return to the same property after they’ve sold and end up paying a lower price!

Sellers ought to consider all offers including those subject to sale of the buyer’s property. In this market, it might be the only offer you get!

by Hayden Groves
REIWA President
REIA Deputy President

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