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2019-11-12 06:56:01

One of the questions most frequently asked by house-hunters is: what is the difference between ‘under offer’ and ‘sold subject to contract’?

They have seen both terms applied to properties and assume, reasonably enough, that they must mean different things. In fact, and confusingly, they mean pretty much the same thing. It just depends which estate agent is handling the sale and which form of words they prefer.

Theoretically, a property could be described as ‘under offer’ if an offer had been made on it but rejected by the seller. But most agents would probably not use the term ‘under offer’ in those circumstances. Apart from anything else, the seller would object that it might put off prospective buyers.

So the phrase ‘under offer’ only generally becomes applicable when an offer has been accepted, whether or not at the full asking price, by the owner. Thereafter, the property is deemed to be under offer and legally can be described as such, whether on the estate agent’s board or on websites.

In recent years, it has become common to see the alternative phrase ‘sold subject to contract’, sometimes abbreviated to ‘sold STC’ or ‘SSTC’. All this means, in practice, is that an offer has been accepted on the property but contracts have not yet been exchanged. There is a time lag often lasting for several months while surveys are done, mortgages are approved and so forth.  This is when sales may fall through, possibly because of structural problems uncovered by a survey.

So, can you make an offer on a house that is under offer? Many buyers insist that once their offer on a property has been accepted, the words ‘sold subject to contract’ should be used to describe the property. It is their way of saying ‘Hands off!’. Many estate agents will usually stop showing the property to other prospective buyers but the situation is far from cut-and-dried.

The practice of gazumping – where a new buyer comes in with a better offer on a property that is already under offer – is not as prevalent as it once was. But it still happens quite regularly. If you are interested in a particular property and see that it is ‘under offer’ or ‘sold subject to contract’, you should not assume that it has been permanently taken off the market. That point will only be reached when contracts have been exchanged.

“As a buyer, you can reduce the risk of gazumping by asking the seller to take the property off the market once they have accepted your offer, building a good relationship with them and of course working to get to exchange of contracts as soon as possible,” says Christopher Bramwell, Head of West London Residential at Savills. “It may also be worth checking whether your seller’s agent has a policy on gazumping, meaning they require the seller to turn down any offers after the initial acceptance.”

The do’s and don’ts around gazumping are notoriously murky. A question that often gets asked is ‘Can one make an offer on a property that is under offer or sold subject to contract?’. The simple answer is yes,  even if the property is already under offer, the agent is legally obliged to pass on your offer to the owner. After that, the ball is in the seller’s court.

“One would like to think that most people will behave honourably,” says Vanessa Athorn, a director of Charles Lear & Co in Cheltenham. “Quite often, in my experience, the sort of people who put in offers on properties that are already under offer can be quite aggressive in their approach. But if vendors feel nervous that the offer that has already been accepted is under threat for some reason – perhaps because of an unsatisfactory survey – it is only natural for them to be open, at least in theory, to other offers. That is obviously particularly true if new offers are above the original asking price.”

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