‘Subject to sale’ offers losing favour in Scottish property market

'Subject to sale' offers losing favour in Scottish property market

Andrew Diamond

Scottish home sellers are increasingly turning down “significant” amounts of money by rejecting their highest offers – when those offers are subject to the sale of another property – and instead opting for a chain-free sale.

This trend is driven by sellers’ desire for greater certainty and faster transactions in a more balanced market.

Solicitors and estate agents Lindsays has warned buyers that that offering on a property ‘subject to sale’ is becoming increasingly ineffective and risks them missing out on a move as a result.

The Edinburgh-headquartered firm expects that use of the deal condition will decrease rapidly in the coming months as would-be buyers wake up to the fact they are being disadvantaged by it – and sellers realise the advantage of their next move not being tied up in a lengthy property chain.

On any given property sale, the difference between the winning bid, which is not subject to sale, and the highest offer, which is subject to sale, is often many thousands of pounds. The biggest difference Lindsays has seen has almost topped £20,000.

Lawyer Andrew Diamond, partner and head of residential property at Lindsays, said: “Purchases subject to sale are the wrong tool for the current market.

“People are cottoning on to the fact that they are inappropriate, ineffective and holding them back. Those who realise this now are going to get ahead and have more buying power.

“We are seeing sellers leave significant sums of money on the table by not accepting the highest offer for their property because that bid is subject to sale.

“They would rather accept less than face the added complication of their deal being dependent on an unknown sequence of other transactions which could fall apart if any one in that chain fails.

“Those who have sold their homes are then getting the pick of properties because they have money immediately available.”

House moves subject to sale mean that a buyer will not complete the purchase of their next property until their current one is sold.

Its use became almost standard practice in the intense heat of the post-pandemic market, with buyers wanting the guarantee of knowing where their next home will be before selling their current property as demand outstripped supply.

But, with a market that is now more tradeable and with more properties available, it is the sellers who are seeking the certainty of knowing that a deal for their home can complete and that they can move on without having to wait for their buyer to sell.

Mr Diamond added: “Bidders trying to use subject to sale are being handicapped. Those who are not restricted by this are going to find themselves in a far stronger position going up against those who are slower to realise that this is happening.

“In many ways, offers subject to sale had become a habit. They were fine for the market in which they grew, but not now. Within six months I am sure those making those sorts of offers will be in a significant minority.”

With the complexity of sale chains one of the main complaints about Scotland’s property market, the firm believes the fall in subject to sale deals will improve the flow of deals.

'Subject to sale' offers losing favour in Scottish property market

Maurice Allan

Across the board, its sales and conveyancing experts are seeing most properties selling on or around their home report valuation – with expected further drops in interest rates improving financial confidence among buyers and sellers.

While some homes continue to demand a premium, they are not at the extremes witnessed as the market emerged from the coronavirus lockdown.

Maurice Allan, managing director of Lindsays’ residential property department, said: “Being the top offer is no guarantee of success in this market.

“Those who are not recognising that the market has shifted are losing out. Once sellers are in a position where they have sold, they are able to go out and buy what they want.”

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