Sold subject to contract (sold STC), is when a seller has verbally accepted a buyer offer but a contract is yet to be formed. In this situation, there is no legal contract, so the agreement isn’t yet a legal contract.
If the seller received a verbal offer which they then consider the seller will display sold STC. The seller may keep the sign up letting other potential buyers that the property is sold STC for different reasons.
The seller may leave a sign-up stating sold STC to let other potential buyers make an offer. This may be to see if they get a better offer. Or this may be to receive back up offers in case the original offer falls through. In 2017 approximately 30% of property sales did not go ahead. Such reasons for a property to fall through include, problems with the valuations, problems with the searches. The buyer may pull out as they have problems which mean they can no longer afford the property, or they may find a property which they prefer.
The agency may also keep a sign-up stating sold STC as a form of advertisement. It lets other property sellers know that this agent has a pending sale on a property which can be seen more favourably for the agent.
Once the buy makes an offer and the seller accepts the offer, but the contract is not yet completed or formed, the sale is classed as STC (subject to contract). STC means that the parties are still discussing the terms and coming to an agreement of the contract. At this point the property may be updated to sold STC or under offer.
Sold STC v Under Offer?
A property is described as under offer if the seller has received an offer from a prospective buyer but that have not yet accepted the offer. In most cases the seller will say under offer to let other potential buyers know that they have received an offer but are still accepting new offers. Typically, the seller will do this to determine if they can get better offers before deciding and committing to an agreement. If the seller does accept the offer the property will initially be placed as sold STC, until the buyer and seller exchange contracts. Once they exchange contracts the funds can be transferred, the contract becomes legal and the property is now sold.
Whilst the house is sold subject to contract the seller allows other buyers to make offers. The seller could be trying to get a better offer before accepting and offer. If the seller accepts a second offer this called gazumping. Gazumping is when the seller pulls out of the initial offer to accept another offer. The buyer may also pull out of the offer whilst they are still in the sold STC period. This allows them to address any concerns with the buyer such as issues brought up during the survey or during searches before making a final commitment.
When a property is sold STC, the solicitor will conduct a survey. They solicitors will inform the buyer of the results of the survey and searches, highlighting any issues. Once both parties are satisfied, they will form a legal agreement. They will exchange contracts and the buyer will make a deposit; the sale is now legally binding.