When it comes to real estate transactions in Ontario, a "Sale of Buyer's Property Condition" (SBP) is an important option for many Buyers who want to make an offer on a new property before selling their current home. This condition allows the Buyer to make their purchase contingent upon the successful sale of their home.
How the SBP Condition Works
When a buyer makes an offer on a new property, they can include a condition stating that the offer is subject to the sale of their current home. This ensures that the Buyer is not committed to the new home purchase until their existing property is sold. The Buyer and Seller will agree on a timeline during which the Buyer expects to sell their property. This timeframe can range from a few weeks to a couple of months, depending on market conditions. If the Buyer successfully sells their home before the condition expires, they can waive the condition and proceed to closing.If the property is not sold within the agreed-upon period, the Buyer and Seller can agree to extend the condition. If an extension can't be agreed upon, the transaction will effectively terminate, a mutual release will need to be signed by both parties, and the Buyer will receive a refund of their deposit.
A Risk for Sellers
From a Seller's perspective, the "Sale of Buyer's Property" condition can be risky, especially in a strong Seller's market. The SBP condition can extend the sale process, causing the Seller to lose valuable time on the market and potentially sell for less if the Buyer isn't able to sell their home. On the other hand, in a Buyer's market, where there are more homes for sale than there are buyers, a Seller may be more willing to accept this condition. In some rural communities or niche areas in the city, a "sale of Buyer's property" condition may also be more common, especially with higher-priced homes.
Adding an Escape Clause
To make the SBP condition more appealing to the Seller, the Buyer will usually add an escape clause to the SBP condition. This clause allows the Seller to continue marketing the property during the conditional period and grants them the right to accept another offer. In this situation, the original Buyer retains the right of first refusal. During this period—typically lasting 24 to 72 hours—the Buyer must decide whether to remove the SBP condition or walk away from the agreement.
The Importance of a Solid Plan
Buyers considering this condition should have a solid plan for selling their existing home. This plan may involve pricing the property competitively, staging and decluttering the home, and being flexible with showings and open houses to increase the chances of a quick sale.
In conclusion, including a sale of Buyer's property condition in an offer can provide necessary protection for Buyers. Still, it's important to be mindful of the potential challenges and to strategize accordingly.
How the SBP Condition Works
When a buyer makes an offer on a new property, they can include a condition stating that the offer is subject to the sale of their current home. This ensures that the Buyer is not committed to the new home purchase until their existing property is sold. The Buyer and Seller will agree on a timeline during which the Buyer expects to sell their property. This timeframe can range from a few weeks to a couple of months, depending on market conditions. If the Buyer successfully sells their home before the condition expires, they can waive the condition and proceed to closing.If the property is not sold within the agreed-upon period, the Buyer and Seller can agree to extend the condition. If an extension can't be agreed upon, the transaction will effectively terminate, a mutual release will need to be signed by both parties, and the Buyer will receive a refund of their deposit.
A Risk for Sellers
From a Seller's perspective, the "Sale of Buyer's Property" condition can be risky, especially in a strong Seller's market. The SBP condition can extend the sale process, causing the Seller to lose valuable time on the market and potentially sell for less if the Buyer isn't able to sell their home. On the other hand, in a Buyer's market, where there are more homes for sale than there are buyers, a Seller may be more willing to accept this condition. In some rural communities or niche areas in the city, a "sale of Buyer's property" condition may also be more common, especially with higher-priced homes.
Adding an Escape Clause
To make the SBP condition more appealing to the Seller, the Buyer will usually add an escape clause to the SBP condition. This clause allows the Seller to continue marketing the property during the conditional period and grants them the right to accept another offer. In this situation, the original Buyer retains the right of first refusal. During this period—typically lasting 24 to 72 hours—the Buyer must decide whether to remove the SBP condition or walk away from the agreement.
The Importance of a Solid Plan
Buyers considering this condition should have a solid plan for selling their existing home. This plan may involve pricing the property competitively, staging and decluttering the home, and being flexible with showings and open houses to increase the chances of a quick sale.
In conclusion, including a sale of Buyer's property condition in an offer can provide necessary protection for Buyers. Still, it's important to be mindful of the potential challenges and to strategize accordingly.
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