Subject to Sale Offers
Posted by admin on June 28, 2011 | No Comments
When selling, have you ever wondered why you should or should not consider offers which are subject to the sale of a Buyer’s property?
Many possible factors can influence your decision. At the top of the list would be to find out if the Buyer will accept you adding a “time clause.” A time clause allows the seller to keep their property on the market. If the seller receives another acceptable offer then the Seller notifies the first buyer (through their Realtor®) that they have so many hours to remove any and all conditions from their offer or step back and let the second Buyer proceed to buy the property. The number of hours for notice is set at the time the purchase price, possession etc are negotiated. Sellers should be aware that the higher the number of hours, the more of a deterrent it is to any other buyer. Commonly 24 to 72 hour periods are used.
In a time clause, buyers sometimes ask to exclude weekends, or at least Sundays and statutory holidays from the calculation of time. Sellers need to be cautious about such exclusions. This can directly affect out of town buyers who come to the area to look on weekends. If that buyer must make their choice, or even prefer to make their choice on the concerned weekend, they may be put off by the existence of a time clause. The shorter the time clause, the less effect it has on the saleability of the property.
If you are a buyer and you have made your offer subject to the sale of your current home, it is best you decide early if you would actually finance the purchase of you new home, rather than wait to sell your existing home. Even if you only think you might wish to bridge/interim finance then go see your banker or mortgage broker as soon as you sign the purchase contract. Don’t wait until a second buyer comes along and triggers the time clause. You may find your banker needs more time to process your loan application than the time clause allows. Better to be safe than sorry.
As a seller, another question you may have is trying to assess if there would be fewer showings, if you have accepted an offer to sell that is subject to the sale of the Buyers home. The answer is that it doesn’t change the number of showings substantially. Realtors® accept that “subject to sale” seldom means they will not be able to bump the first offer, and they are therefore usually happy to show the property. Of course the shorter the time clause, the less the effect it has on showings.
Sellers, please know that your Realtor® is not required to notify the Multiple Listing Service that a subject deal is pending. In the case of “subject to sale” it is doubtful your Realtor® would report the sale and it is your right to ask your Realtor® not to. Your Realtor® will have to tell Realtors® who show your property of the existence of a time clause; however. Once the Realtors® get the details, they usually do continue efforts to show the property.
All in all, I think “subject to the sale” offers can be managed to not have too much negative effect on the Sellers position.
Jane Field works with RE/MAX Vernon. To suggest topics for future articles or to ask Jane questions, email her at jane@vernonrealestate.ca or call 250.503.3755.
Filed Under: Buyers, Sellers, Vernon Real Estate
