A Subject to Sale clause or Special Clause Sale is simply when the Buyer puts an Offer in on a property, but the Offer to Purchase has the condition that the Buyer first needs to sell their home.
If the Seller accepts an Offer with that condition, the listing remains active on MLS, and will continue to be marketed by the Listing Agent. The status does not change to Pending or Conditionally Sold. However, the remarks field of the listing must note that there is a “Special Clause in effect” or “Subject to Sale Offer”, as well as identifying the length of the notice (i.e. 24, 48, or 72 hours)
If the Seller receives another Offer on their property, the Buyer is notified that they have 24, 48, 72 hours (or whatever time frame was agreed upon in the Contract) to waive their Subject to Sale clause and proceed with the purchase. If the Buyer does not, or is unable to waive the condition, the Seller can then accept the new Offer after the specified time has elapsed.
No other terms or conditions of the Subject to Sale Clause may be disclosed to any other subsequent potential Buyers making a Purchase Contract.
Sellers need to think about several things before deciding whether to accept an Offer with a Subject to Sale Clause:
- What is the likelihood of the Buyer’s home selling? Is it priced properly? How long has it been listed for? etc.
- Some buyers might be turned off by seeing a home with a Conditional Offer on it. They might not want to compete with another buyer when there are ample properties on the market.
- In a slow market, it might be good to “lock-in” a potential buyer at today’s market value, and hope that their home sells soon as well.
There are advantages and disadvantages to this type of Conditional Offer that varies dependent on your situation and the current marketplace.