Buying a Home Subject to Sale in Victoria: How to Make Your Offer Stronger

You have found the right home. But there is only one problem:

You still need to sell your existing property before you can complete the purchase.

Does that mean you have to let the new property go? No, not necessarily.

In Victoria, a purchaser buying by private sale can negotiate an offer that is subject to the sale of their existing property. But there is an important catch: from the vendor's perspective, your offer carries more uncertainty than an offer from a buyer who is already ready to settle.

That means the question isn't simply:

“Can I make an offer subject to sale?”

You can. But the better question is:

"How do I make a subject-to-sale offer strong enough for the vendor to seriously consider?”

That is where preparation and negotiation become critical.

What Does “Subject to Sale” Mean When Buying Property?

A subject-to-sale offer means your purchase of the new property is conditional upon you successfully selling an existing property, usually within an agreed timeframe.

For example:

You want to purchase a Melbourne home for $1.5 million, but part of the funds required for settlement will come from selling your current home.

Rather than selling first and risking missing the property you want, you may negotiate a contract that makes the purchase conditional upon your existing home being sold.

If appropriately structured, this can allow you to secure the next property without taking on the full financial risk of owning both properties indefinitely.

However, the exact wording of the condition matters enormously.

This is a legal condition in a contract of sale, not something that should be scribbled onto an offer after a quick conversation with the selling agent. Your solicitor or conveyancer should review and approve the wording before you sign.

Is a Subject-to-Sale Offer a Weak Offer?

Compared with an equivalent unconditional offer? Usually, yes. But that doesn't mean it is a bad offer.

There is a considerable difference between:

Buyer A:

“My house isn't on the market yet, but I'm sure it'll sell.”

and:

Buyer B:

“My property has been prepared for sale, the contract and Section 32 are ready, the agent has been appointed, the pricing has been independently assessed, photography is booked and the campaign launches this week.”

Both purchasers may technically be buying subject to sale, but from the vendor's point of view, however, they represent very different levels of risk.

This is the key lesson:

A subject-to-sale condition does not necessarily make you a weak buyer. Being unprepared makes you a weak buyer.

How to Make a Subject-to-Sale Offer More Attractive

If you need the vendor to accept additional uncertainty, your job is to remove as much of that uncertainty as possible.

1. Get Your Existing Property Ready Before You Make the Offer

Ideally, don't wait until you find your next home before thinking about selling yours. Have as much as possible organised beforehand:

• appoint your selling agent

• engage your conveyancer or solicitor

• prepare the Section 32 and contract

• complete necessary repairs and presentation

• organise photography and marketing

• establish a realistic asking-price strategy

• determine when the property can actually be launched

• understand the likely selling timeframe.

Even better, have the property already on the market. A vendor may be much more comfortable accepting your offer if they can see that your property is already listed and the sale is genuinely underway.

2. Be Realistic About What Your Property Is Worth

This is one of the biggest traps. Your subject-to-sale offer may depend upon your existing home selling for $1.2 million. But what if it is realistically worth $1.1 million?

Suddenly you potentially have two problems:

You can't sell at the price you expected, and you may no longer have enough money to complete the new purchase.

Before committing to another property, obtain a realistic assessment of your existing property's value.

Not the price you hope to achieve. Not the highest appraisal provided by an agent trying to win your listing. But

What will the market realistically pay for your property?

When I assess this situation for a buyer, I would look at many factors, including recent comparable sales, competing listings, buyer profile, buyer demand, property type, condition, location, etc. The new purchase is only as secure as the assumptions supporting the sale behind it.

3. Understand How Saleable Your Existing Property Really Is

Not every $1 million property carries the same risk. A renovated family home in a tightly held Melbourne suburb with strong owner-occupier demand may be considerably easier to sell than a highly unusual property, compromised site or apartment in a development where several near-identical properties are already competing for buyers.

Ask:

How many genuine buyers are likely to want this property?

Then ask:

At what price?

Those are different questions.

Almost anything will sell at the right price. The problem arises when your entire purchasing strategy depends upon achieving a price the market won't support.

4. Don't Make the Condition Broader Than It Needs to Be

Imagine you own two properties and would prefer to sell both before purchasing. Should you make your new purchase subject to the sale of both?

You might want to, but the vendor may be considerably less enthusiastic. Every additional dependency increases the chance of something going wrong.

If selling one property will provide enough funds for the purchase to proceed, consider whether the condition genuinely needs to depend upon selling the second property as well.

This is where good financial modelling before making the offer can substantially improve your negotiating position.

Sometimes reducing a purchase from being subject to the sale of two properties to one can turn an unattractive offer into one a vendor is prepared to consider.

5. Give the Vendor a Sensible Timeframe

“Subject to sale sometime over the next three months” is unlikely to excite a vendor.

Your timeframe needs to reflect:

• preparation time

• marketing campaign length

• likely days on market

• contract conditions on your sale

• finance periods

• settlement dates

• contingency time if something goes wrong.

Too short and you create unnecessary pressure on yourself. Too long and the vendor may reject your offer because their property could effectively be tied up while they wait for you. The solution isn't simply asking for the longest possible condition.

It is creating a realistic, defendable timeline.

6. Consider Your Price and Other Contract Terms

Price is important, but vendors don't assess offers on price alone. Suppose a vendor receives:

• $1,500,000 subject to sale; and

• $1,490,000 with no sale condition.

The lower offer could still be more attractive because it provides greater certainty. That doesn't automatically mean you should throw another $20,000 at the property. Instead, look at the whole offer.

Can you strengthen another term?

Perhaps:

• a larger deposit

• a settlement date that suits the vendor

• fewer unnecessary conditions

• evidence that your existing property is already being marketed

• a shorter, commercially realistic subject-to-sale period

• flexibility around possession or settlement.

The best offer is not always the highest offer. It is often the offer with the best combination of price, certainty and terms.

7. Don't Stack Unnecessary Conditions on Top of Each Other

It is always good to have these conditions to protect your purchase:

• Subject to sale.

• Subject to finance.

• Subject to building inspection.

• Subject to pest inspection.

• Long settlement.

• Small deposit.

Individually, some of these protections may be entirely sensible. Put every possible condition into the same offer and the vendor may decide that your contract resembles a Christmas tree. Not every offer is the same, and knowing when to use which condition to your advantage is your best option.

Part of representing a buyer properly is deciding which protections are genuinely necessary and which risks can be investigated or resolved before making the offer.

For example, where possible, we may complete much of the property due diligence before negotiations commence rather than making the vendor wait while we investigate basic questions afterwards.

Protect the buyer — but don't unnecessarily weaken the offer.

8. Other Better Alternatives in place of "Subject to Sale

A subject-to-sale purchase isn't the only way to move from one property to another.

Depending upon your circumstances, alternatives may include:

• selling first and negotiating a longer settlement

• negotiating rent-back arrangements

• bridging finance

• temporary accommodation

• family or other short-term funding

• using available equity

• synchronising the two settlements.

Each alternative carries different costs and risks. Speak with your lender or mortgage broker before making the offer, rather than discovering after signing that your finance doesn't work the way you expected. Knowing your fallback options can also make you a much stronger negotiator.

9. What If the Vendor Receives Another Offer?

This is where the wording of your contract becomes particularly important. A vendor accepting a subject-to-sale contract may want contractual protection allowing them to continue dealing with other buyers or requiring you to make a decision if another acceptable offer appears.

Never assume what happens next. Have your conveyancer or solicitor explain:

• whether the vendor can continue marketing

• what notice can be given

• what you must do if another offer is received

• how quickly you may need to respond

• whether you would need to waive your sale condition

• what happens to your deposit if the condition isn't satisfied.

You need to understand these scenarios before signing the contract.

Trying to work them out when another buyer has suddenly appeared is a fairly stressful way to learn contract law.

What If My Property Hasn't Even Been Listed Yet?

You can still try. But your negotiating position is weaker. If the property you want has little competition, the vendor may be prepared to accommodate you.

If it is a highly sought-after Melbourne property with three other interested buyers, asking the vendor to wait while you appoint an agent, prepare your home, organise photos and begin a four-week campaign is a much harder proposition.

This is why buyers upgrading homes should start planning their sale **before the perfect property appears on realestate.com.au at 5:17 pm on a Thursday.**

By Saturday's inspection, everyone else has found it too.

Can I Make an Offer Subject to the Sale of Two Properties?

Potentially, subject to the vendor accepting the condition and appropriate legal drafting. But strategically, I would avoid it unless there is a compelling reason.

Selling one property introduces one additional transaction. Selling two means there are now effectively three transactions that need to work together:

1. Property A must sell.

2. Property B must sell.

3. Your new purchase must complete.

Every transaction has its own purchaser, finance, valuation, conveyancer, bank, contract conditions and settlement arrangements.

That's a lot of moving parts and uncertainties.

If your financial position allows the new purchase to proceed after selling only one property, structuring the offer around that property alone may make your offer significantly more attractive.

Should You Sell First or Buy First?

There is no universal answer.

Selling first provides greater certainty.

You know exactly how much money you have available, you're no longer making a subject-to-sale offer and you may negotiate more strongly as a buyer.

The risk? You sell and cannot find the right replacement property.

Buying first gives you certainty over your next home.

But now you must manage the sale of your existing property and potentially carry greater financial and timing risk.

Buying subject to sale sits somewhere in between.

It can give you protection while allowing you to pursue the property you want, but the vendor has to agree.

The correct approach depends on your financial position, existing property, target market and tolerance for risk.

When Does a Subject-to-Sale Offer Make Sense?

I'd be more comfortable recommending this strategy when:

• your existing property is readily saleable

• its likely value has been conservatively assessed

• you are prepared to price it realistically

• the property is already listed or ready to launch immediately

• you have a sensible selling timeframe

• your finance position is clearly understood

• the vendor isn't sitting on a clearly superior unconditional offer

• the contract has been reviewed by your legal representative.

I'd be much more cautious when:

• your property's value is uncertain

• you need an optimistic sale price to afford the new purchase

• the existing property requires substantial work before listing

• several properties need to sell before you can proceed

• the new property is attracting strong unconditional competition

• your finance hasn't been properly assessed

• you have no contingency plan if your sale takes longer than expected.

A Subject-to-Sale Purchase Is Really About Risk Management

Buyers sometimes become emotionally attached to the property they want and treat selling their current home as the problem to solve afterwards. However, if I were to do it, I prefer doing it the other way around.

Before making the offer, work backwards.

What does your existing property realistically sell for?

How quickly could it sell?

How much equity will actually be released after the mortgage and selling costs are paid?

What happens if it sells for $50,000 or $100,000 less than expected?

What happens if settlement is delayed?

Can the new purchase still proceed?

Once those questions have been answered, you can decide whether a subject-to-sale offer is sensible and how it should be negotiated.

The Bottom Line

Yes, you can buy a property subject to selling your existing home. Sometimes it is exactly the right strategy. Sometimes, it is not.

But simply adding “subject to sale” to an offer isn't much of a strategy.

A strong subject-to-sale buyer should be able to demonstrate that:

• their existing property can realistically be sold

• it has been priced correctly

• the sale is ready to commence or already underway

• the proposed timeframe makes sense

• the finance works

• there is a contingency plan

• the contract has been professionally reviewed.

The objective is to give yourself the protection you need without asking the vendor to accept unnecessary risk. That balance can make the difference between having your conditional offer dismissed and having it accepted.

Buying and selling at the same time?

At Concierge Buyers Advocates, we represent the buyer. Not the selling agent.

We assess the property you want to buy, establish its fair value, investigate the risks, develop the negotiation strategy and work out how to present your offer as strongly as possible.

If your purchase needs to be coordinated with the sale of another property, getting the strategy right before signing the contract can save a considerable amount of stress, money and unnecessary risk.

Because finding the next home is only half the job. Making sure you can actually get from the old one to the new one is the other half.

Disclaimer: This article contains general information only and is not legal, financial or taxation advice. Contract conditions should be prepared or reviewed by your solicitor or conveyancer, and financing options should be discussed with an appropriately qualified finance professional.