"Conditional upon sale of home" | Could this clause change the Toronto real estate market?

A recent article by The Globe & Mail entitled "Real estate buyers muscle in with heavy demands" presents the notion that buyers are more likely to insert conditions in their offer when purchasing a home in today's slower marketplace.

The condition that the article primarily focuses on is a clause pertaining to the offer being conditional upon the sale of the buyer's home which essentially allows the buyer to submit an offer for the seller to accept, however the sale is not finalized until the buyer is able to sell their current property.

If they are unable to do so, they are allowed to back out of the deal (usually with no penalty).

In all honesty, this kind of situation really only benefits the buyer as it provides them an easy out should they not be able to get the anticipated price they had in mind for their home.

The seller in this situation takes way more risk as the property is publicly listed as "Sold Conditional" until such time that the deal either firms up or falls apart and if the deal doesn't work out, they have to start the process all over again (which can sometimes be several months later).

When the housing market is hot, these kind of conditions wouldn't stand a chance of being accepted but now that things are shifting, will more seller's be likely to accept this kind of scenario?

The answer is still likely no.

As mentioned above, this kind of clause primarily benefits the buyer and moves majority of the risk over to the seller and in an ever-changing market, this is something that most people selling their home would like to avoid.

Are there any alternative options are available?

Yes!

One option that we suggest to our clients who decide to buy first & then sell is to ask for a longer closing (120 days) and then insert a Flex Closing Clause into the offer which allows the buyer to move up the closing date should they be able to sell their existing home quickly.

This works out better for both parties as it provides the seller a firm offer while providing the buyer the flexibility/time needed to sell their home.

The main risk here is that you still run the chance of not getting the price you intended, however this should be discussed with your real estate agent prior to starting this whole process.

So back to the title of this article.

Could the "Conditional upon sale of home" clause change the Toronto real estate market?

Based on the current market conditions, it doesn't seem probable as there are other options available that benefit both the buyer & seller but it could catch on in certain areas or with certain demographics (i.e. Downsizer's/Right-sizer's).

Have any questions?

Feel free to message me on Instagram @TorontoRealEstate.ca or leave a comment below!

Rylie C.