What do “under offer” and “sold subject to contract” actually mean?
Before you buy or sell a house, it’s important to understand the terms used by estate agents and other industry professionals. Assuming you know the meaning of common phrases could leave you out of pocket, or missing out on your dream home. So, what do “under offer and “sold subject to contract” actually mean to property buyers and sellers?
What does Under Offer mean?
There’s no strict legal definition of the term “under offer”. Normally it’s used by estate agents to advertise that a buyer has made an offer on a property, but the amount might be below the asking price.
It’s usually applied while a seller is considering whether to accept the offer or not, although it could still be used if the initial purchase amount is rejected, or once a bid has been accepted. The important thing to note is that it doesn’t mean any paperwork has been processed.
For buyers, this means that you can still enquire about properties advertised as under offer. So, you can find out what stage the sale is at and put in your own higher bid if you wish. An estate agent is legally obliged to pass on any higher offers, as they are contractually bound to work in the best interest of the vendor.
It also means that buyers can’t assume that they’ve secured a new property once it’s under offer. Until the paperwork is signed and completed a seller can still pull out of a deal. So it’s important to try and move things along quickly and to ask the vendor to take the property off the market to prevent other interested parties from getting involved.
If you’re selling, it’s important to remember that even if your home is under offer, you can still change your mind and accept a higher amount from a different buyer.
The positive side of this is that it means you can register your interest in a house that’s under offer in case the sales process falls through for any reason. If the buyer is part of a chain, then this is a realistic possibility. According to Rightmove, around 15% of properties under offer, or sold subject to contract, come back onto the market after the sale has fallen through.
But the downside is that you could put in a bid on a house, have it accepted and then lose out to another buyer. This practise is known as gazumping and isn’t illegal. But it’s certainly unfair if the buyer has already spent money on searches and surveys only to lose out. As a seller the decision whether to accept a later, higher bid for your property is really down to your personal judgement.
What does Sold Subject To Contract (SSTC) mean?
When a property is listed as Subject To Contract (STC) or Sold Subject To Contract (SSTC), it means that not only has an offer been made, but it’s definitely been accepted. This is the period when surveys, mortgages and other parts of the house buying process are being organised.
But even when the For Sale board outside your home has been changed to Sold, it doesn’t mean the process has been completed. So it’s technically still possible to gazump a sale by putting in a bid on a property listed as Sold Subject To Contract.
As a buyer it’s important to build a good relationship with the vendor, try to keep moving the sale along with solicitors and surveyors and get the property taken off the market if possible, even once it’s Sold Subject To Contract.
Many estate agents do have policies to help prevent you being gazumped, including refusing to let anyone else view the property. But they’re still legally obligated to pass on any higher bids that are made, leaving it open to the vendor to change their mind.
This may feel unfair, but it’s important to remember that as a buyer you can still pull out of a house sale at this stage as well. If a survey shows an unexpected issue, finances fall apart or another problem occurs, it does mean you can walk away if you need to.
If you’re selling your house and you’ve accepted an offer as Sold Subject To Contract, you can choose to accept or ignore any further offers. Aside from any moral judgements, you might have more trust in the original buyer if they’re making the offer with no chain to potentially fall apart. They may be a lot closer to completing the sale compared to starting again with a new offer.
Sold STCM in Scotland
The process is different if you’re buying or selling a house in Scotland. In this case, any purchase offer made by a prospective buyer will immediately become legally binding as soon as it’s made.
But if the paperwork, or missives, fail for a property transaction, it will then be referred to as Sold STCM or Sold Subject to Conclusion of Missives. Estate agents are then legally required to pass on all information and offers from other potential buyers, unless the vendor has given them a sign letter stating no information or offers below a certain figure should be passed on to them.
Ultimately a house sale will only be secure when the paperwork has been completed. This means if you’re looking to buy a property, it’s important to keep the process moving along as quickly as possible once you’ve decided to put in an offer. This means you need to sell your existing home quickly and using a home buying service could save you valuable time and prevent the offer on your dream house falling through.
If you’re selling a house, it may feel like everything is in your favour. After all, you’re able to choose to accept higher offers if they come along after you’ve accepted an initial amount. But it also allows space for buyers to potentially pull out of a house purchase, which can cost you time and money to relist your home or mean that you miss out on your next move. So it could be worth considering a reputable house buying service if you need to sell your house quickly and want to make sure the sale doesn’t fall through.
At National Homebuyers we’ll guide you through our quick house sale process and provide you with a fast cash offer, guaranteed. Contact us today on 08000 443 911 or apply online now and one of our friendly team will be in touch.