Tread warily with ‘subject to’ offers: Geoff Baldwin

GUEST OBSERVER

In a market where high numbers of stock exist upgraders will often opt to place an offer subject to the successful sale of their existing property, however this process needs to be considered carefully to avoid wasted time and disappointment.

Invariably, when a subject sale is negotiated, the sellers will include a clause allowing them to continue marketing their property to other buyers with a proviso that the subject buyers be given a period of time to go unconditional (usually 48 hours) after which the new offer is accepted.

To avoid this situation upgraders should consider getting their existing property sold or at least under offer prior to placing an offer on another home and perhaps ask for a longer settlement period to enable everything to come together.

The other problem with making subject to sale offers is that they don’t excite a seller as much as being presented with a cash or a subject to finance offer because the latter comes with a predictable settlement date and hence there is more scope for negotiation. 

If an upgrader does decide to place a subject to sale offer then they should also try to negotiate a period whereby the property cannot be sold from under them if or when another buyer comes onto the scene.

Geoff Baldwin is chairman of the  Certified Practicing Real Estate Agents and can be contacted here.