When moving from one home to another, you might find yourself in the position of wanting to put a conditional offer on a property subject to the sale of your current home. This is called a ‘subject to sale’ offer.
While this isn’t an ideal circumstance to find yourself in, it is quite common – particularly in the current Perth property market conditions.
The risks involved
The state of the market you’re buying in has implications on the kinds of risks you face if you put a subject to sale offer on a property. At present, Perth is experiencing softer market conditions with property listings hovering above the long term average.
A common risk associated with putting forward a subject to sale offer is that you may not achieve a sale within a reasonable time frame and potentially lose out on the property.
You could also find that when you do finally sell, the sale price is lower than you originally anticipated which may impact your finances.
Before placing a subject to sale offer, make sure you are serious about making the move and have a good understanding of the local market trends. Be sure to speak with a REIWA agent in the area too, their local knowledge and real estate expertise will be able to assist with your decision making.
The 48 hour clause
Sellers can be reluctant to accept subject to sale offers because they can 'tie' their properties up, because of this they will often impose a 48 hour clause on a subject to sale offer. This is a condition that you agree to with the seller and is included in the contract for the sale of land.
The 48 hour clause specifies that if another buyer makes an offer you must decide within 48 hours whether to make your original offer unconditional or withdraw it.
When presenting a subject to sale offer it’s advisable to prepare your finances as if making an offer subject only to loan approval. This way you won’t need to scramble for alternative finances.
Speak with a qualified financial advisor about your options prior to making the offer and be sure to factor in any ‘worst case’ scenarios so you are well covered and prepared moving forward.
Selling your current home before placing an offer on a new home puts you in the best position and is the ideal outcome – however this isn’t always an option, and if the perfect home pops up while you’re still trying to sell, a subject to sell offer lets you make your serious interest known.
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