In this market we are seeing a lot more of this cheeky little bad boy! Consider this your ‘Get Out of Jail Free’ card in your real estate transaction. Now there will be two parts to this blog post. First and foremost, what exactly is a ‘Subject to Sale’ clause. Secondly, how to go about SELLING your home once you have secured a property for purchase and using this clause.
In truth, I may have over exaggerated slightly, when calling this your get out of jail free card, forgive me, I’m British and we tend to do that. What this little condition can do, is protect you from the ever growing fear that you will purchase a home you like and NOT be able to sell your current one. Unless you can afford two mortgages, this is a MUST HAVE clause for a lot of people in this market.
Below is an example of exactly how this clause can be worded in a contract offer:
As you will see, a date is given by which the buyer must have sold their home, along with the address of said home. The second paragraph outlines the seller can accept another favourable offer, which requires the buyer to complete their subject to sale within an agreed up time (this time frame is confirmed BEFORE offers are accepted and can be anytime agreed upon, but is commonly 48 or 72 hours.)
This simple clause allows you to go full steam ahead when you find a property you like, whilst reducing your chances of owning both homes to practically zero. Nobody wants TWO mortgage payments!!
Just to note though, when offering on a property and including this subject, it is likely the seller will negotiate less when it comes to pricing, due to their acceptance potentially tying up their negotiating time/power with other offers.
For example - If you want a higher rate for your home and want to give that a shot, then it’s likely this will take time and not be an immediate result. Well as we’ve discussed, time is against you when operating on a subject to sale basis.
Depending on your personal circumstance, you may want to try listing the property at a price which will entice the market to enter into your home and put in an offer. You’re not going to under price your home but now is not the time to get all high and mighty on what YOU feel the home is worth and how quickly it will sell. What YOU feel the home is worth vs what a buyer is will to pay, can be a huge difference most of the time.
So trust your REALTOR here on Market Value and what they suggest will entice the market. Always remembering it’s balancing good value, while not flirting on the wrong side of time it takes to complete, especially in this market.
Too many people are currently losing their new homes because of their refusal to be flexible to current market conditions, and the situation in which they are REALLY in - being, need to sell before a specified date.
If this is you and you want maximums, the a subject to sale may not be for you. You would be better inclined to sell your home first and then purchase. Just remember if you do that, you could be under pressure to find something you like in time, facing this problem, but on the other end.
Remember, stay REALISTIC, it’s what is actually going to get you the most value,BOTH TIME AND MONEY. A sold home for $1 has made you richer than an unsold home for $1,000,000…...