Skip to content

Subject to Sale Offers and the 48-Hour Clause – How Does it Work?

Buyers are often sellers, too. Many people who decide to sell their home also look for a property simultaneously and often find something appealing before securing a buyer for their own.

When moving from one home to another, you might want to put a conditional offer on a property subject to the sale of your current home. This is called a ‘subject to sale’ offer.

While this isn’t an ideal circumstance to find yourself in, it is quite common – particularly in the current property market.

Usually, these agreements enable the seller to continue to promote their property for sale and, in the event of receiving an alternate offer to purchase (typically not subject to the sale of that buyer’s property), give notice to the first buyer of their intention to accept/proceed with the second offer after two business days. This colloquially termed “48-hour clause” provides the original buyer two business days to obtain an offer on their property or waive the benefit of the subject to sale condition.

Notices served between the parties must be technically compliant to ensure neither party is unfairly advantaged.

Importantly, sellers ought to know that accepting a ‘subject to sale’ offer at say $600,000, binds them to that sale price within the 48-hour period – even if a second unconditional offer is superior on terms or in price (provided the original buyer choose to make their offer unconditional within the 48-hour time frame).

The risks involved

The state of the market you’re buying in has implications on the risks you face if you put a subject-to-sale offer on a property. A common risk associated with putting forward a subject-to-sale offer is that you may not achieve a sale within a reasonable time frame and potentially lose out on the property. The contract period of a subject-to-sale offer is (usually) 3 months.

Buyers could also find that when they finally sell (unconditional contract), the price might be lower than initially anticipated.

Before placing a subject to sale offer, make sure you are serious about making a move and understand the local market trends well.

The 48-hour clause

Sellers can be reluctant to accept subject to sale offers because they can ‘tie’ their properties up and put off other potential buyers. While under contract with a subject to sale offer, the sellers can’t accept another subject to sale offer, no matter what price or terms are offered in conjunction with it; because of this, they will usually impose a 48-hour clause on a subject to sale offer’s acceptance.

The 48-hour clause specifies that if another buyer makes an offer the seller wants to accept, the current buyer under contract must decide within 48 hours whether to make the original offer unconditional or formally withdraw the offer.

Buyers should speak with a qualified financial advisor about their options before making the offer. They should factor in any ‘worst case’ scenarios to be well covered and prepared moving forward. If they need extra finance, it’s in their best interest to present a letter from their mortgage broker of proof of up-to-date, pre-approved finance to the seller’s agent so he/she can present it with the offer. This will ensure a much better chance of getting their offer accepted by the seller.

Selling your current home before placing an offer on a new home puts you in the best position and is the ideal outcome – however, this isn’t always an option. If the perfect home pops up while you’re still trying to sell, a subject to sale offer lets you make your serious interest known.

Subject to sale offers can benefit sellers

Although this type of sale requires more careful attention, contracts that include a ‘subject to sale’ condition often succeed and proceed smoothly to settlement.

This type of sale also has the potential to benefit the seller, with the buyer often paying a premium for the privilege and protection of settling after the guaranteed sale of their property. Given the conditional nature of the sale, sellers are justified in asking for a higher price from the subject to sale offer.

There have been instances where the seller rejected a ‘subject to sale’ offer at a premium price, only to have the same buyers return to the property after they’ve sold – and settled at a lower price.

I would advise sellers to consider all offers, including subject to sale offers. It’s in their best interest to consider all serious buyers, as this can often lead to other buyers committing to an offer once they know other parties have expressed an interest in buying.

If you are considering selling a property in Albany, Mount Barker, Denmark or Walpole areas, please contact or call me to discuss your needs. Consultation, advice and appraisals are free of charge, with no obligation or harassment – ever.