Getting buyers to sign a contract is not as simple in a slowing market
Stalled property campaigns are forcing nervous vendors to accept a once-hated safety net to secure buyers.
In a clear sign the market has cooled, sellers are increasingly agreeing to “subject to sale” clauses, tying their own property settlement to the successful sale of the buyer’s home.
A small number of Queensland property listings are even explicitly inviting the conditional offers, including a developer in Jacobs Well and an apartment seller in Wynnum.
In Hope Island on the Gold Coast, a $1.195m waterfront apartment on Sickle Ave recently went under contract following an online marketing campaign headlined: ‘Owner will accept Subject to Sale – 30 days to sell your property’.
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ERA Real Estate Christies Prestige agent Alex Caraco, who handled the sale, estimates one in 10 of their transactions were now completed subject to sale, a figure he expects to rise as market conditions continue to soften.
“Pre-budget, we told all our sellers, much to their dismay, that they are probably going to need to negotiate a discount on their transaction, or the alternative is to offer a subject to sale,” Mr Caraco said.
“If it takes an extra 30 days to reach settlement, that might not be much of a risk for the vendor in today’s market where a property might not sell as quickly.”
Conditional buyers were generally expected to top up their offer by a marginal amount, such as $10,000, to compensate the vendor for the risk.
Mr Caraco said the trend was driven by downsizers who had their wealth tied up in existing properties, refused to touch their superannuation, and wanted to avoid expensive bridging finance rates.
Alex Caraco said one in 10 contracts were subject to sale
Agent Courtney Christie-Caraco said the arrangement was more seamless when one agent handled both sides of the transaction.
She pointed to a recent Hope Island apartment sale where a downsizing couple used the clause, allowing her team to successfully sell their Helensvale family home in just three days.
Despite the success stories, property forums are littered with warnings for buyers attempting the strategy.
Because buyers are working against a ticking 30-day clock, they are often forced to accept a financial haircut on their own home just to keep the chain from collapsing.
A Brisbane buyer said they took a $1.055m offer, losing out on an expected $1.1m peak price, because they didn’t have time to wait for a better bid.
2204/41 Sorrento St, Wynnum is another listing offering flexible conditions for buyers
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To hedge this risk from the seller’s side, vendors in the broader market are increasingly demanding strict “48-hour sunset clauses” allowing them to keep marketing the home and dump the conditional buyer if a clean, unconditional offer comes along.
Mr Caraco rejected the tactic, branding the sunset clause “completely unfair” to buyers. He noted they showed serious intent by investing thousands of dollars to urgently prepare and market their own property to meet the 30-day deadline.
But Ray White Bulimba agent Daniel Gierach said the 48 hour clause was crucial to protect vendors from becoming trapped in a conditional chain.
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“If you are early in your campaign with strong inspection numbers and other buyers actively engaged, tying yourself to one buyer’s chain is rarely the right move,” Mr Gierach said in a market guide.
“If the buyer’s property is in a soft market or has not yet been listed, the risk that you will lose two to three months and end up back at square one is too high.
“If the price is at or below your expected unconditional outcome, you are taking the risk without being paid for it.”
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