What is a Conditionally Sold property?
A property with this status means that someone is currently in the process of buying the home or listing. An offer has been written by a Buyer & usually after some negotiations, that offer has been accepted by the Seller. It is important to understand that the offer is conditional to either the Seller and/or Buyer satisfying certain conditions. In most cases, the Buyer makes their offer conditional to financing, inspections, etc.
Upon accepting an offer, the seller used to have the option to advertise their property as "Conditionally Sold" (Pending) or remain "Active" on MLS®; with no indication that they are currently pending a sale. Many found this strategy as deceptive, time consuming & confusing to many buyers. This will no longer be an option as of January 3, 2022.
**As of January 3, 2022, sellers will no longer have the option to conceal their Conditional Sale or Pending status. However, the seller will always retain the right to decide if they wish to show their property, regardless of its status on MLS®.**
The price and terms of the conditional offer are not disclosed on the MLS® System.
Conditional, Conditionally Sold, Pending, Under Contract.. all the same.
1. The property is still visible on MLS® for additional buyers to see. Even if a listing is marked "Pending", it still remains on Realtor.ca & many of the other websites.
2. Agents may still show properties that are under contract (conditionally sold or referred to as having "an offer"). Buyers may feel deceived when they are not informed of an offer before they take time out of their schedule to see a property. If asked, a seller's agent should disclose if there is an accepted offer, as an act of respect to the buyer & their agent. If a buyer really loves a house, they can ask their agent to see it even if it is Conditionally Sold. Who knows what could happen..
3. If the current deal does collapse (ie. financing is not approved or the inspection is unsatisfactory to the buyer), having marked a property as "Pending" shows there's an interest in a particular property. Though returning to the market is unfortunate for the seller, the re-activation of the property as "Active" on MLS® is also a benefit. Both agents & buyers monitoring the market or set up on the Portal can see that the property is available again. If a buyer had interest but was too slow to make a move; when the property is put back on the market, it may create a sense of urgency for them if they don’t want to lose the property a second time around. It may also be valuable to know WHY the property returned to the market..
Talk to your agent for more information or if you're unsure about viewing or making an offer on a property that's Conditionally Sold or Pending.
Sale of (Buyer's) Property with a Time Clause
Sometimes there are instances that the home may be conditionally sold, but the current buyers have a condition where they would need to sell their home first. Usually, the Condition of Sale of Property happens in a Buyer’s market, when there are more Buyers than Sellers; the Buyers have control & the Sellers are motivated.
In this case, a buyer makes an offer to buy a home conditional on them selling their existing property during "X" period of time. If they don’t sell their home during that period, the deal dies & the buyer gets their deposit back. If the Buyer successfully sells their property during the time period, they waive the condition just like they would a financing condition; & if there are no other remaining conditions, the home is considered legally sold & binding.
A Time Clause is an important part of the Sale of Buyer's Property condition. It allows the Seller to continue to market & show the property during the conditional period & gives them the right to accept a second offer, with the original Buyer retaining the right of first refusal. During the right of first refusal period (usually 24-72 hours), the Buyer has a choice: either remove the Sale of Buyer's Property condition (whether or not they have actually sold their home) & commit 100% to the purchase or walk away from the agreement. For example:
- The Seller accepts an offer to buy their home, conditional on the sale of the buyer’s own property (SOP) from Buyer A, with a 48-hour escape clause. Buyer A has until March 31st to sell their home if the escape clause isn’t activated.
- The Seller continues to market and show the home
- On March 1st, the Seller finds a second Buyer (Buyer B) and accepts an offer to purchase the home conditional on Buyer A not removing the SOP condition.
- The Seller activates the Time Clause: Buyer A is given 48 hours to remove the SOP condition or walk away from the agreement.
- If Buyer A removes the condition during that 48 hours, Buyer A get the house, & Buyer B is out of luck.
- If Buyer A is unable or unwilling to remove the condition, Buyer A gets their deposit back, & Buyer B is now the successful purchaser.
Note: The second offer from Buyer B doesn’t have to be a higher price or better in any other way – it just needs to be accepted by the Seller for the escape clause to come into effect.
Sold
Everyone is happy in this situation! :)
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