What Does an Under Offer Mean
04 Sep 2021
Introduction: Several legal terms come up during real estate transactions. "Under offer" is a common term used by marketing or advertising agents and house hunters who assume it means an offer made by the buyer but rejected by the seller. But it is also used in other circumstances, where the vendors claim it might put off prospective buyers.
What does the term 'under offer' mean? It refers to the buyers' offer on a property where the deal is in the early processing stage, and the buyer is considering the proposal but has not yet accepted or declined it. It is also used when the offer has been accepted but not for the full asking price.
Some estate brokers use it in place of 'Sold STC', which means the seller has accepted the offer, but the paperwork has not been completed. So a home appears more available than the one where the documentation has been completed. Some estate agencies use it to prompt interested parties into acting fast during the transaction.
What Happens When a House Is Under Offer?
"Under offer" is not a legal biding as it is often described as a bit of a grey area when things start. One makes house repayments, conducts surveys, and they may even pull out of the sale when things go wrong, or the minds change, leading to a possible chain break.
The seller can allow people to see the house if it is "under offer." You can allow until the point of exchange as there is a legal obligation for either party. But once there is a legal obligation, the seller should take the property off the market and stop any other parties to look into it.
What Does Under Offer Mean UK?
The deals listed as under offer or Sold Subject to Contract can be purchased with a higher quote if the estate representative wishes to go with it, rejecting the current offer. Mostly the seller determines who can buy, and cost may not be the only factor.
If they accept an offer and the sale is underway, if they get a better rate that is not much more than the current value offered by the buyer, they may stay with current purchases.
In some cases, if the new purchaser moves more quickly than the current buyer, they accept the new offer.
According to some experts, up to 15 per cent of the houses are sold subject to contract, where at some point it will come back into the market. It happens when the seller and the buyer fail to agree on the sale terms, eventually listing the option once again.
If you make an offer, the estate representative is legally obliged to pass it to the vendor and then the transactions are up to the involved parties. Some vendors do not let the buyer down once the offer is accepted, but others may agree to a higher offer price.
So when you make an offer, you can ask the vendor to remove it off the market searches to avoid gazumping.
What Does Under Offer Mean Renting?
If you are looking to rent, you may see the term "let agreed," which is similar to "under offer" in the case of rental transactions. "Let agreed" is used for the condition when the house has been rented out, or an agreement is in place, but before the deal is completed or the keys are handed over; it will require checks on the tenant, like the credit checks, the contacting references and the immigration checks.
In most cases, the enquiry about renting in the 'Let Agreed' stage is going to be a long shot, and it is at the discretion of the letting agent if you are allowed to visit the place or not.
What Is the Difference Between Under Offer And (STC) Sold Subject to Contract?
It means the same thing, depending on which phrase the agency prefers to use.
They can use the "under offer" term when the vendor accepts an offer on the property, whether it's the asking price or not.
But one can see 'STC' or 'SSTC' with the offer, which means, either subject to contract or sold [ subject to contract -the offer has been accepted, but the contracts have not been exchanged yet].
The STC or under offer duration is when surveys are conducted, mortgages are sorted out, and other legal documents are arranged. When the mortgages fall through, or the mind changes as issues are revealed in the property, like if there are structural problems – the contract might end up without being exchanged after all these stages.
Can you make an offer at the stage when there is already an existing offer?
Sold STC - It means the stage when the solicitor gathers all the related information required to complete the purchase without any legal issue, and then the surveys and searches are conducted. In this stage, many pertinent questions are answered to get a complete picture of the property as the buyer tries to discover the loopholes associated with the deal.
Although the stage can be painfully slow, it is vital to take before signing on the dotted line. Once the sale enters a legal agreement, the buyer may not pull out, so they try to ensure before committing fully to the deal and transferring the money. Sometimes, it can be a slow process, so the buyer will have to frequently contact the solicitors and the vendor to get things moving forward.
Generally, listings show SSTC in the case when –
The person who bought a property is not impressed with the information that pops up in the local searches.
A mortgage application fails, forcing the buyer to cancel the deal. For example, a mortgage application can fail when the survey conducted by the buyer generates information or data that complicates the mortgage application.
The Difference Between Under offer and SSTC
The deal in the "under offer" phase is slightly open to other suggestions. For example, some ask to add 'STC' to a listing once the offer is accepted, so the rivals are discouraged from visiting or buying the place. The agents may stop viewing when the property is STC or under offer, but it is not necessarily off the market, and it is not illegal to make an offer in this stage – with or without viewing.
What is Gazumping?
When a new buyer makes a better offer on the existing property, and the seller accepts it, it is called Gazumping. Some real estate agencies have policies to prevent such practices as it is not fair, but it can happen in many situations.
How Long from Under Offer to Sold?
There is no set maximum or minimum duration for how long the house can remain under offer. It remains under offer for as long as the involved parties continue to work through the exchanging process or contract making.
The time lag can last several months while the surveys are accomplished, the mortgages are approved, and other processes are completed. In many cases, the sale may fall due to structural problems uncovered by a survey.
Although many will not show the house to prospective buyers, it is not normal for them to gazump when a new buyer gives a better offer.
Most houses won't stay under offer for long. The buyer, the broker, and the seller will try to get a contract signed as soon as possible after the offer is accepted. The buyer may have to complete certain actions before signing the final contract.
They need to sign the agreement contract, get the mortgage valuation surveys, get the mortgage in principle, conduct searches by conveyancing solicitor, arrange for deposit funds and get the completion date agreed.
What Does It Mean When a House Is Under Offer?
It usually involves the following stages –
A written offer for the property from the buyer.
The seller either accepts, rejects, counters, or bargains over price and other terms.
If the seller disagrees, the buyer may accept the counter or make another offer.
If the seller accepts the offer, the buyer continues to process through the exchange of contracts.
If the seller rejects, the buyer makes a new offer or looks elsewhere.
How Long Does a House Stay Under Offer For?
As per the experts, it should take an average of eleven weeks from the under offer stage to the completion of the sale. The house moving process often takes longer in case of Stamp Duty holidays, but when the demand increases, most solicitors, advisors and surveyors become overworked, creating a lot of backlogs.
As per property experts, the transactions based on sales agreed may take two to three months, even when it has no chain, and some may take up to a year to sell.
One should not be phased out by the idea of a long period on the open market just trying to find a buyer and then pushing sales fast.
You can appoint a fast solicitor who specialises in fast sales to speed up the process. Such solicitors are experienced in moving along, and they have certain surveyors who won't leave you waiting for weeks or months for results. However, sometimes, even fast sales find it challenging to meet the deadlines.
Going through auctions means avoiding the open market, which is a faster way to get a sale. You do not get the under offer stage at auctions, and the contracts should be exchanged on the day as and when you get a deal, or the buyer has 28 days to complete.
On average, if you go for an auction of your house, it can be sold in 6 to 10 weeks, but it takes a lot of time to get your house booked for such auctions.
During SSTC, the property remains visible on the portals and the agent's websites, and it may attract interested parties who may contact to know about the offers. They also try to find out the stage at which the sale is, and if the sale falls for multiple reasons, the agents keep the other interested parties on file to contact immediately when the current buyer pulls out.
Legally the agent should pass higher offers on to the client as well. Nevertheless, they are bound by contracts to work in the interest of the vendor and not the buyer, so the seller determines if you should give the property for higher rates to another buyer or not. Of course, they can choose to disregard the new offer, but most vendors get tempted and end up accepting higher prices.
So the property in the stage of SSTC can still fall through, which means the current buyer will have to pay the cost of searches and surveys without any gains.
Although gazumping happens in small, the current buyer loses in the process, and hence, it is important to keep things open. If the surveys show structural issues, they can still get out of the sale or renegotiate to tell the seller about the problem or the new price. Therefore, the buyer should always check all aspects of the sale before moving into the exchange of contracts phase.
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