A recent settlement has underscored the importance of ensuring buyers use the right Offer and Acceptance clauses for their financial position.
In this case, our client made an offer on a property in a new subdivision, but needed to sell his existing three-bedroom home to do so.
Despite this, he made a cash offer. His Offer wasn’t subject to the sale of his existing home – and he didn’t have the funds on hand, either.
The Titles for the subdivision hadn’t been issued yet, so he figured he’d have plenty of time to sell his home before settlement began. But months later when the Titles had issued, he still didn’t have a buyer for his existing property.
Without the funds to proceed to settlement, the buyer was forced to make an agreement with the developer to cancel his contract and forfeit his deposit.
Unfortunately, things don’t always go as planned – but that’s where special conditions come in handy.
Real estate agents (and buyers themselves) can help prevent deals like this from falling over by ensuring either:
- The buyer has sufficient funds to complete the transaction, or
- The Offer is dependent on the buyer obtaining funds – ie. a finance clause or subject sale clause is included.
If the seller wants a cash offer but the buyer doesn’t have sufficient funds, they may not be the right buyer for the property.
By ensuring the buyer makes the right kind of Offer, you can help prevent a deal from falling over – saving the buyer’s deposit, and saving the seller the hassle of marketing their property all over again.