Tips for Home Buyers: Subject to Sale

07.02.2015

Buying a New Home Subject to the Sale of your Old Home

I wanted to chat about an option that Home Buyers may have when buying their new home, called a subject to sale. This subject allows Buyers to purchase their new home, subject to their current home selling by a certain date. The simplest reason for doing this is to line up the sales of these properties for financing and moving day reasons – it gives the family a chance to move out of their old house and into their new house without any hassles, rental places or otherwise.

First, let’s take it back a notch and talk about subjects.

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 many reasons, the typical reason is to give the Buyers a chance to do their due diligence on their potential new home, including tasks like getting a home inspection (to discover thing that can’t be discovered during a simple walk through), getting their financing secure (mortgages can only be officially approved when there’s an accepted offer on a specific property) and gathering any documents that a potential Buyer has the right to see (so they know what they’re getting into). Legally, the Buyer has to use every reasonable effort to see that the conditions are satisfied.

A subject to sale is another subject clause the Buyer may use, which (typically states):

Subject to the Buyer entering into an unconditional agreement to sell the Buyer’s property at ____Address_____ by ____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.

Reading through the legal jargon, this subject means that the Seller will give you a chance to sell your property by a certain date (typically the Buyer will have a month or so) – HOWEVER – if the Seller get’s another offer, then they can force you to decide if you’re going to go ahead and purchase their property (regardless of if they’ve sold their home) or the deal will terminate so the Seller can sell their home to this other Buyer.

Why would a Buyer use a Subject to Sale Offer?

Like I stated before, typically to try to line up their financing and the moving dates to work perfectly with their old home and new home. A Buyer may have also been planning to sell their home, and before they had the chance to do that, they may have found the perfect home and don’t want to risk losing it. Seller’s can be hard pressed to accept this subject (especially if it’s a busy market with lots of Buyers), so the Buyers (or really, their Buyers agent) have to convince the Sellers that the Buyers current home will sell quickly because it’s a great house, priced to sell, is clean and ready, is on the market already, etc.

Why would a Seller accept a Subject to Sale Offer?

Subject to Sale offers aren’t strictly to benefit the Seller, so why would they “tie-up” their property to one Buyer? If their home has been on the market for a little while and hasn’t sold, it could be useful as it secures an Accepted Offer from an interested Buyer, which will lead that Buyer to focus on buying this home, rather than any others. Typically, Sellers balk at subject to sale offers and in order for the Buyer to convince the Seller to accept, they make their offer hard to refuse financially, either by offering above their asking price or the asking price, which of course, is great for the Seller.

A subject to sale offer can make sense in a lot of situations, and they occur successfully fairly often, you’ll just need a smart negotiator (that’s us!) on your side (whether you’re the Buyer or the Seller) to ensure that you are protected and understand every aspect of this situation. If you’re the Buyer, this same agent will be selling your home so you’ll want someone who can sell quickly to ensure that you can close on your ideal new home.

[x] close

Login for Full MLS Access

Name*:

Password*:

Email*:

Phone:

Budget: -

Square ft.: -

# of Bedrooms:

# of Bathrooms:

Area:

Key criteria:

Terms of Use

The term Virtual Office Website ("VOW") refers to a Participant's (REALTORS®) Internet website, or a feature of a Participant's Internet website, through which the Participant provides real estate brokerage services to Registrants (clients and prospects) with whom the Participant has first established a relationship where the Registrant has the opportunity to search for MLS® data, subject to the Participant's oversight, supervision and accountability. By agreeing to these "Terms of Use" you:

  1. acknowledge and understand that the Terms of Use do not create an agency relationship and do not impose a financial obligation on the Registrant or create any representation agreement between the Registrant and the Participant;
  2. understand that all data obtained from the VOW is intended only for your personal, non-commercial use;
  3. do have a bona fide interest in the purchase, sale, or lease of real estate of the type being offered through the VOW
  4. agree not to copy, redistribute or retransmit any of the data or information provided;
  5. acknowledge the Board/Association ownership of and the validity of the copyright in the MLS® database.
  6. agree that all information provided may be provided to the relevant Board and may be used to administer and operate the VOW and to investigate any breach of security of the data or the MLS® rules
  7. that a "mouse click" is sufficient acknowledgement and agreement to the terms
  8. must supply a user name and a password, the combination of which must be different from those of all other Registrants on the VOW, before being permitted to search and view information from the MLS® database via the VOW.
  9. must provide a valid email address. The Registrant may be permitted to access the VOW only after the Participant has verified that the email address provided is valid the Registrant's agreement to the VOW's Terms of Use is confirmed.
  10. understand the Participant must at all times maintain a record of the name, telephone number and email address supplied by the Registrant, and the username and current password of each Registrant, such records to be kept for not less than 180 days after the expiration of the validity of the Registrant's password. If the Board/Association has reason to believe that a Participant's VOW has caused or permitted a breach in the security of the data or a violation of MLS® rules related to use by one or more Registrants, the Participant shall, upon request, provide to the Board/Association a copy of the record of the name, email address, telephone number, username, current password, and audit trail, if required, of any Registrant identified by the Board/Association to be suspected of involvement in the violation.
  11. Understand that information on this site is deemed to be valid but is not guaranteed. It is the responsibility of the registrants to confirm all information on their own. Broker may not have reviewed or approved listing enhancements. All information provided by the listing agent/broker is deemed reliable but is not guaranteed and should be independently verified.
  12. Understand any agreement entered into at any time between the Participant and Registrant imposing a financial obligation on the Registrant or creating agency representation of the Registrant by the Participant must be established separately from the Terms of Use, must be prominently labelled and may not be accepted solely by mouse click
  13. have received, read and understand the brochure published by the British Columbia Real Estate Association entitled Working With a REALTOR®

Having agreed to the terms and conditions of use, I would like to have access to this VOW information.

 Terms and Conditions I agree to the Terms and Conditions

[x] close

Login for VOW Access

Remember me

Don't have an account? Register now!