There are plenty of new terms that you may find confusing during the buying and selling process of a property. Some of the words you may come across when you are a potential buyer or selling your house are Sold Subject to Contract (SSTC), Under Offer (UO), Subject to Contract (STC), and Under Bid.
Since buying a property is one of the greatest lifetime achievements for many individuals, you must understand these terminologies and expressions used during property sales. In this article, we will discuss more concerning Sold Subject to Contract. So, what does it mean?
Definition of SSTC
When a property is on sale, the term SSTC or Sold STC indicates that a buyer has submitted an offer on a house and has been accepted by the seller. The agreement is ‘subject to contract’ as it is just a verbal agreement that is not legally binding. Depending on whether you are a seller or buying a property, the definition of Sold Subject to Contract has a somehow different meaning.
As a buyer, SSTC provides a window for your housing solicitor to gather all the legal information required for a property listings safe purchase. On the other hand, for a seller, Sold Subject to Contract indicates that it is time to withdraw the property from the market permanently.
Many people think SSTC and Under Offer are two different terms. Many estate agents still use these phrases interchangeably as both mean that a buyer has made an offer and the seller of the property has accepted it. Additionally, both indicate that the legal paperwork still needs completion for the agreement to become legally binding.
Technically, a property SSTC is still available until the buyer and seller exchange signed contracts to complete the sale. During this stage of a property’s sale, no party involved has a legal obligation to complete the process. That is the primary reason why a significant percentage of Sold Subject to Contract properties end up back in the market due to an unsuccessful sale attempt.
Making an offer on a sold subject to contract property
If you are interested in acquiring a Sold STC property, you should go ahead and submit your offer. Since Sold STC is not legally binding, an estate agent is obligated to submit your offer to the seller of the property. If you want to increase the chances of a seller accepting your bid for a Sold Subject to Contract property, you may want to submit a slightly higher bid.
Most sellers would always go for a higher offer for a Sold Subject to Contract property regardless of their initial agreement with another buyer. The technical term for the practice is gazumping. There is nothing illegal about gazumping. Therefore, there is nothing that can stop another buyer from submitting a higher offer, whether a seller has accepted your initial offer or not.
Although gazumping is not illegal, it may feel unfair if you are on the receiving end. Therefore, you need to beware if you want to avoid losing the property to other buyers.
How to prevent gazumping
Since gazumping is perfectly legal, the best way to protect yourself against losing the Sold Subject to Contract property to another determined buyer is by denying them the window to present the offers in the first place. So, how can you avoid gazumping?
- Approach the seller to withdraw the property from the market permanently – Settling for Sold Subject to Contract only opens a window for more determined buyers to submit higher offers. Therefore, you should shut the window by approaching the seller via the estate agent to get the property off the market. However, a seller would only consider this option if they know you are serious and ready to see the sale through quickly.
- Act quickly – When making an offer for a property, it is unlikely that you would have all the required elements to see the purchase through. While working on these requirements, other buyers get a window to submit higher offers for the property. Therefore, the quicker you get done with these sale preparations, the lower the chances of gazumping.
- Hire a conveyancing solicitor in advance– It is advisable to approach a conveyancing solicitor in advance if you want to avoid being on the receiving end of gazumping. Conveyancing solicitors can handle property buying preparations faster, speeding up the process, thereby slimming the window for other buyers to submit higher bids.
Finalising the purchase of an SSTC property
If you are quick enough or successful in convincing a seller to take the property off the market, you would be able to reach the stage of exchanging contracts without any problems. It is essential to have your finances ready during the entire property’s purchase process. Before exchanging signed contracts, you need to forward your deposit to the seller through your solicitor.
Once you and the seller have exchanged the signed contracts, you can celebrate as it is illegal for the seller to accept offers from other buyers, however high they are. At this stage, both the buyer and the seller are legally bound to complete the property’s sale and purchase.
Conclusion
SSTC indicates that a seller has accepted an offer but is not legally obligated to complete the sale. At this stage, both the seller and buyer can pull out of the sale process without doing anything illegal. Sold Subject to Contract is not legally binding; therefore, a buyer needs to find a way to prevent gazumping. Once the seller and buyer exchange contracts, they are both legally obligated to see the sale through.
If you are looking to purchase a house you will eventually need a conveyancing solicitor to help with the conveyancing process, including documentation and contracts. If you are interested in what this may cost you, click this link https://www.conveyancing-online.co.uk/get-a-quote/ to receive an instant online quote.
