Our property experts are warning buyers that that offering on a property ‘subject to sale’ is becoming increasingly ineffective and risks them missing out on a move.
According to our team, the use of this deal condition will decrease rapidly in the coming months as prospective buyers wake up to the fact that it is putting them at a disadvantage - and sellers are understanding the advantage of their next move not being tied up in a lengthy property chain.
Andrew Diamond, Partner and Head of Residential Property, said: “Purchases subject to sale are the wrong tool for the current market. People are cottoning on to the fact that they are inappropriate, ineffective and holding them back. Those who realise this now are going to get ahead and have more buying power.
“We are seeing sellers leave significant sums of money on the table by not accepting the highest offer for their property because that bid is subject to sale. They would rather accept less than face the added complication of their deal being dependent on an unknown sequence of other transactions which could fall apart if anyone in that chain fails. Those who have sold their homes are then getting the pick of properties because they have money immediately available.”
House moves subject to sale mean that a buyer will not complete the purchase of their next property until their current one is sold. This type of offer grew in popularity during the post-pandemic market, with buyers wanting the guarantee of knowing where their next home will be before selling their current property as demand outstripped supply.
However, in a market that is now more tradeable and with more properties available, it is the sellers who are seeking the certainty of knowing that a deal for their home can complete and that they can move on without having to wait for their buyer to sell.
Andrew added: “Bidders trying to use subject to sale are being handicapped. Those who are not restricted by this are going to find themselves in a far stronger position going up against those who are slower to realise that this is happening.
“In many ways, offers subject to sale had become a habit. They were fine for the market in which they grew, but not now. Within six months I am sure those making those sorts of offers will be in a significant minority.”
With the complexity of sale chains one of the main complaints about Scotland’s property market, our property teams believe that the decline in subject to sale offers will improve the flow of deals.
Maurice Allan, Managing Director of Residential Property said: “Being the top offer is no guarantee of success in this market. Those who are not recognising that the market has shifted are losing out. Once sellers are in a position where they have sold, they are able to go out and buy what they want.”
Published 21 May 2024.
