Buying A Property Subject To The Sale Of Your Own

What is Subject to Sale?

If you’re looking to buy a new home but haven’t sold your current property yet, you may need to explore a subject to sale arrangement. This approach allows you to put in an offer on a property while making the purchase conditional on selling your existing home.

Many buyers choose to buy before selling for various reasons, such as securing a favorable interest rate, acting quickly when their dream home hits the market, accommodating a growing family, or relocating for work.

If selling first isn’t an option, there are ways to navigate the process to your advantage. Here’s what you need to know about buying a property subject to sale.

What are the pros and cons of buying subject to sale?

Buying a property before you sell means you can plan for the move and if all lines up, avoid having to move twice or rent elsewhere before you move into your new purchase. This is a huge pro as it saves time, money and energy ordinarily spent moving.

Aside from the pressure of having to sell your property before you settle on your purchase, the biggest con to buying subject to the sale of your property is that you may not seem like the ideal buyer when the vendor is comparing your offer with those who can settle without conditions.

If you must buy before you sell, there are a few ways to look more appealing to a seller. If you can afford to, make a generous offer that sets you apart from a buyer who is offering less but does not need to use a ‘subject to completion of sale’ clause.

If you cannot afford to blow others’ offers out of the water, you may need to offer more security to the seller by specifying in the contract certain dates by which you must have sold and settled on your property. It can be written into the contract that if you do not sell your home by the specified date either party may terminate the contract, which will reassure the seller you are serious about trying to sell your home to fund the purchase of their property.

Subject to completion of sale clause

The inclusion of a ‘subject to completion of sale’ condition is essential for homeowners who want to buy before they sell. This clause indicates that the vendor has agreed not to settle on the property unless or until the buyer’s property sells.

As a buyer, a ‘subject to completion of sale’ clause affords an added protection that means funds for the new property will not be required until the buyer’s existing property is sold, and the proceeds of that sale can be put towards the new purchase.

Preparing Your Home for a Quick Sale

If you’re considering a subject to sale arrangement, selling your existing property quickly becomes a top priority. A well-prepared home can attract buyers faster and improve your chances of securing the best possible price. Start by decluttering and staging your home to make it more appealing. Small upgrades, such as fresh paint, modern fixtures, and landscaping improvements, can also boost its market value.

Pricing your home competitively is just as important—research similar properties in your area to set a realistic asking price. Working with an experienced real estate agent can help you position your property effectively in the market, increasing the likelihood of a fast and successful sale.

Negotiating the Best Terms in a Subject to Sale Contract

When entering a subject to sale agreement, negotiating the right contract terms can give you more control over the transaction. One key factor is the sunset clause, which sets a deadline for selling your home. If your property doesn’t sell within the agreed timeframe, the contract may be terminated, allowing the seller to consider other offers.

You can also negotiate a kick-out clause, which permits the seller to continue marketing their home. If they receive a better offer, you’ll be given the option to proceed with the purchase or withdraw. Understanding these conditions ensures you have the flexibility needed to manage the buying and selling process effectively. Consulting a conveyancer can help you navigate these terms and secure a contract that works in your favor.

Seek a long settlement

If you need another alternative to buying subject to sale or renting between the time you sell and buy, you could request a long settlement period from the vendor of your new property and match the settlement date with your sale.

A settlement period of three or four months is usually enough time to ensure a simultaneous settlement, but if the dates do not match up perfectly, your solicitor or conveyancer may be able to negotiate the date on your behalf.

What are your options if you cannot sell your home after agreeing to buy another property?

If your property hasn’t sold in time to fund your new purchase, you may need a bridging loan—a short-term loan that covers the gap until your sale settles. This option can be useful if a long or simultaneous settlement isn’t possible, but keep in mind that bridging loans are typically interest-only and come with higher rates than standard home loans.

If you’re unsure about your options, talk to our conveyancer for expert advice on navigating your property transaction smoothly.