Kim Mullan Blog
Sale of buyer's property conditional - Lets Talk
October 18th 2023
SALE OF BUYER’S PROPERTY CONDITION - LETS TALK
1-In a slower/softer buyer’s market, or even a more balanced market, many buyers will opt to include a condition of sale of their own home when they bring you an offer. The condition might be for 14-60 days depending on how ready their own home is for market or if they are already engaging a buyer.
2- Accepting a conditional offer doesn't preclude sellers from considering/accepting subsequent offers provided an “Escape Clause” is included in the Agreement of Purchase & Sale. The Escape Clause grants the initial buyer a brief window, “right of first refusal”, to solidify their conditions while the subsequent offer remains contingent on the release of the prior agreement. If they cannot firm up their condition they must sign a mutual release.
3- Many Ontario real estate boards use a shared operating system that integrates board data to the MLS system. Brokerages register conditional offers as "continue to show" or "do not show". Properties that are conditionally sold with a direction to “continue to show" remain visible to buyers on realtor.ca.
4-There are a few challenges that can further reduce traffic and even the visibility of your listing. Sellers need to be informed in order to mitigate risks they may face.
A- Showing activity typically drops off with this type of offer. Other buyers who would need to include a condition of sale of their property (SOP) often assume sellers won’t want to bump one house sale for another. (not always true but that’s another topic).
B- Some buyers don't want to get emotionally invested knowing a prior buyer already has a right of first refusal and could firm up anytime.
C- What many sellers don't necessarily know is that the current operating system relegates the conditionally sold properties to a sub-category of listings. Realtors must “OPT IN” to that category in order to include your property in their search for active listings.
Ideally the default searches would return ALL active listings and Realtors would “opt out” of receiving certain types of listings. In its current format there is risk of less visibility, less traffic & less potential of a 2nd offer.
When you accept an offer with a condition of sale of buyer's property you do not give up your right to be actively marketed in the same manner you originally were. In a busy or hot market this is less critical but in a softer market you can't risk less activity. As a seller you need to be fully informed about the decisions you are making and the full impact they may have.
The reality is you are going to receive offers that include this condition. Is the back-up property ready for market? Showing top notch? Priced to be next in line to sell in their category of listings? These are stipulations that can be worked into your offer. Insist that the property be listed on the local board, with a local agent, in a short period of time, at a saleable price and commit it to paper. Are you confident enough in the sale of the buyer’s home that the risks are worth the rewards?
Understanding the implications of limited visibility and potential drawbacks of agents not automatically opting in to view these listings is crucial.
Is the impact to your property’s visibility worth it?
Sometimes that answer is yes. Sometimes it's no.