Selling a property with "Subject To" Buyers

Buying & Selling Real Estate
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Selling a property with "Subject To" Buyers

Bobby Vernazza
Rental Property Investor · Silverton, OR · Member since 2016 · 24 posts · 5 votes

Hello Fellow BP'ers,

I just listed one of my flips this past weekend and had the first open house on Saturday.  It was a huge hit with 83 people going through the house and subsequent showings throughout the proceeding days.  However, as of now, we have only received 1 offer which is going to expire tomorrow.  This is a full price offer however, the buyer wants me to pay 6000 in closing costs and the offer is subject to the buyer selling their house.  They currently have a pending offer and are simply waiting on an appraisal for their house.  However, I am not too sure how long this will take and I will also have to wait for an appraisal of my house to be done as well.  I am looking to sell this house ASAP and get rolling on a few other properties.  Does anyone have any words of wisdom about these "Subject To" offers?  I am a little hesitant to take it due to the fact that its going to take an undisclosed amount of time to close, yet I do not want to decline this offer to only receive lower offers from then on.  Plus, if the buyers pending offer falls apart, I am going to be stuck waiting on them to sell their house.  Any insight that anyone has will be greatly appreciated!

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  • Suzette Murray
    Real Estate Broker · Anaheim, CA · Member since 2016 · 42 posts · 15 votes
    9y

    Hi @Bobby Vernazza,

    As with any offer you are able to submit a counter offer to the buyer.

    You can counter anything that you wish to remove or change from the current offer. Doing so, however; does make it a brand new offer and not in force until all parties come to a meeting of the minds and sign the final counter and original contract.

    In this case you can counter a realistic time frame in which they must release the "subject to" clause, giving them time to get their appraisal in and or make a decision to continue with your purchase knowing their deal is pretty solid. In addition you can counter the dollar amount you are willing to give toward closing costs, as that takes away from your bottom line, making this not really a "full price" offer.

    This will at least show good faith on your end. Good luck to you, I hope all works out. :)

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  • Bobby Vernazza
    OP
    Rental Property Investor · Silverton, OR · Member since 2016 · 24 posts · 5 votes
    9y

    Thanks for the feedback, I am thinking of countering their offer 9300 higher than the list price (which is actually what I would be paying in closing, not 6000 as originally stated). This will then allow for basically a full price offer. However I am still a little nervous do that because of the fact the buyers are going to have a VA loan, with very little money down and in addition to this, they only have a 2000 earnest money deposit. Along with the increased price in the counter, I am thinking of increasing the earnest money to 6000 which will give them more skin in the game. Or I am thinking about going back to the buyer and saying that all offers will be reviewed on Monday June 19th which will allow for another open house this weekend. This will hopefully stimulate a few other full price offers to come in.

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  • Suzette Murray
    Real Estate Broker · Anaheim, CA · Member since 2016 · 42 posts · 15 votes
    9y

    Countering higher can be fine; however, realize the appraisal must still come in at that higher price or the lender won't loan the extra money above the appraised value. So if you were doing that you may want to be sure the value supports it.

    VA loans are a great product, enabling the borrower to come in with little to no money, so it is less likely they will be wanting to put down more money.

    You certainly can put them off with a set date to give them an answer, hold another open house to see if you can attract another buyer. Realize they may continue to look at properties and find another suitable one to move forward with leaving you without a buyer. 

    In this case there is no sure way to know the outcome. I've seen many deals where the seller thinks they will get a better offer than the initial one, discard it, only to find out, no other subsequent offer is better than the one they let go. If it's a hot market, you should get other offers...IF you are priced right in your market. Make sure you've done that homework, it will pay off in the end.

    Best of luck you you!! 

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  • Bob B.
    Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes
    9y

    @Bobby Vernazza Why not stipulate that you will accept their contingency, you will continue to market the house and if you get a better offer they have 24-48 hours to remove it. 

    If you had that many buyers look at it and only one offer I would think it is probably a fair price offer.

    Good luck

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  • Bobby Vernazza
    OP
    Rental Property Investor · Silverton, OR · Member since 2016 · 24 posts · 5 votes
    9y

    What I ended up doing was going back to the buyer stating that we will review all offers on Monday.  They were relatively okay with this idea, yet since then I have had two other offers come in.  They both are using conventional financing and both are contingent upon the sale of their house.  However with one of the offers, the buyer's house has not even been listed yet, so it's still a longg ways off from getting sold.  However with the other offer, the buyer's house has been listed with an accepted offer (all cash) and are already through the inspection period.  As of now the last offer looks pretty attractive, but with an open house today, we will see what kind of other offers I get in before Monday.  Thanks for all the input!

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