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If you've found 'the one' in Thornbury, Bentleigh or maybe out near Werribee, there's a good chance you still need to sell your current place to fund the move. That is where a 'subject to sale' offer can help. It lets you make an offer to buy, on the condition that your own home sells within a set timeframe. When it is prepared properly, it buys breathing room. When it is vague, it can unravel fast.
Below is a clear, Melbourne centric guide to what a subject to sale offer is, how it works, when to consider it, and how to stack the odds in your favour.
What is a 'Subject to Sale' Offer? The Quick Refresher
A subject to sale offer is a conditional offer. You agree to buy, provided your existing property is sold within a certain period and often at a minimum acceptable outcome you define. In Victoria, conditional offers are a normal feature of private sales. Typical conditions include finance approval, building and pest inspections, and, relevant here, the sale of your existing property.
Unlike finance or building clauses that appear in the standard Victorian contract, a subject to sale usually needs a carefully drafted special condition prepared by your conveyancer or solicitor. The clause sets deadlines, what counts as 'sold', and what happens if timing slips.
When Does This Actually Apply in Melbourne?
Most inner Melbourne houses sell at auction, and auction contracts are unconditional. You cannot bid and then add a subject to sale clause afterwards, unless the seller agrees to very specific prior terms in writing. Subject to sale clauses are therefore used mainly in private sales or off market deals, which are common for apartments and townhouses, and for homes outside hot auction pockets.
If you are negotiating a private sale, you may include conditions and agree a settlement period, commonly 30, 60 or 90 days in Victoria.
How the Process Works: Step by Step
1. Get Your Ducks in a Row
Speak with your lender or broker about finance scenarios, including bridging finance as a fallback. Then brief your conveyancer to draft the right special condition. The wording matters because it controls deadlines, what 'sale' must look like, and each party's rights if another buyer appears.
2. Make the Conditional Offer
Your signed offer will include the special condition and a deposit arrangement. In Victoria, when an agent is involved, deposits are held in a regulated trust account until settlement, unless a lawful early release occurs. Your deposit is not handed to the seller directly.
3. Keep Marketing Momentum
Your clause will set a time limit for you to sign a contract to sell your place, sometimes also to achieve unconditional status on that sale by a certain date. Sellers often keep marketing their property while you do this, which is reasonable risk management on their side.
4. Watch for a '48 Hour' or 'Two Business Day' Clause
Many subject to sale deals include an 'escape' clause. If the seller receives another acceptable offer, they may give you a notice period, typically 48 hours, to remove your subject to sale condition and proceed, often by arranging bridging finance, or to withdraw and let them accept the other offer. The idea is to keep the market open while giving you a fair chance to firm up.
5. If Your Sale Happens, You Go Unconditional
Once you meet the conditions, your purchase proceeds like any other. If the condition is not met by the deadline, the contract usually ends and your deposit is returned in line with the contract's terms. Under standard Victorian practice, deposits are security for performance and are held in trust, then applied at settlement or returned if the contract ends lawfully under a condition.
6. Cooling Off Still Exists in Private Sales
Separate from the subject to sale condition, Victoria has a three business day cooling off period for most private sales, with a small penalty of $100 or 0.2 per cent of the price, whichever is greater. There are important exceptions, including auctions and certain buyers and properties, so do not rely on cooling off to fix a poorly drafted clause.
The 48 Hour Clause, Decoded
Think of it as a polite 'heads up'. The seller continues to advertise. If they receive another offer they prefer, you get a notice, then two business days to:
- Remove or waive your subject to sale condition and proceed, often by using bridging finance, or
- Decline to waive it, in which case the seller can end your contract and accept the second offer
The exact notice method and timing must be set out clearly. Your conveyancer will ensure the notice provisions are practical, so you do not miss the window because an email went astray.
How Subject to Sale Clauses Interact with Other Conditions
Finance
The standard Victorian contract already includes a finance condition. If your finance is also contingent on selling your property, your team should connect the dots in the clause drafting. In other words, avoid a situation where you are required to waive the subject to sale to beat a 48 hour notice, yet your lender still needs evidence of your sale. A tailored special condition can accommodate these realities.
Building and Pest Inspections
This is a separate condition that protects you if a serious defect is discovered. It usually runs on its own timeline and is not a substitute for the subject to sale safeguard.
Section 32 (Vendor Statement)
Before anyone signs the contract, the seller must give you a Section 32 statement disclosing key information about the property. This is a legal requirement under the Sale of Land Act and is not optional. Always have your conveyancer review it. If it is defective in a material way, there can be remedies, although it is fact specific.
The Benefits and the Snags
Why Buyers Like It
- You can lock in your next home without immediately arranging bridging finance
- You limit the risk of owning two properties at once or rushing a discount sale of your current place
- You buy time to align settlements, which can save on storage and short term accommodation
Why Sellers Accept It
- In a slower patch, a conditional contract can be better than no contract
- The 48 hour clause lets the seller keep options open, which balances risk
The Snags to Respect
- You may be 'bumped' by an unconditional buyer
- If your clause is vague about what counts as 'sale' or 'unconditional', you can be stuck in limbo or in a dispute
- Bridging finance costs can bite if you waive the clause to keep the deal alive
- You still need to move fast on marketing your current place, which can be stressful
Drafting a Strong Subject to Sale Clause: What Good Looks Like
Work with your conveyancer to make the clause specific. A solid clause typically:
- Names your property and states whether 'sale' means a signed contract or an unconditional contract
- Sets sensible dates for signing your sale contract and for that sale to become unconditional
- Explains the 48 hour process in plain terms, including how a notice must be delivered and when the clock starts
- Spells out deposit treatment, consistent with Victorian rules about trust accounts and early release only when the contract is unconditional and 28 days have passed since signing
- Aligns with finance timing, so you are not forced to choose between breaching your loan approval process and losing the house
How Deposits and Early Release Actually Work in Victoria
When an agent is handling the sale, your deposit sits in the agent's trust account. If there is no agent, it goes to the seller's conveyancer's trust account or into a special purpose bank account. Deposits are generally held until settlement, unless there is a valid early release after the contract is unconditional and at least 28 days have passed since signing. That early release requires you to be satisfied with the seller's disclosure about any debts on the title. If the seller does not accept your offer, the deposit is returned to you.
If a contract ends lawfully under a condition, the deposit is typically refunded. The standard position in Victorian practice is that the deposit is security for performance, not a windfall for the seller if the contract terminates under a valid condition. Always check your exact wording and get advice promptly if timings are tight.
A Realistic Melbourne Timeline
Here is a common rhythm our clients aim for:
Week 1: You sign a private sale contract on your target property with a subject to sale clause and a 48 hour provision. Your deposit is paid into trust. You launch the campaign for your current home immediately.
Weeks 2 to 3: First opens, buyer interest builds. Your clause might require you to sign a sale contract within, say, 14 to 21 days.
Weeks 3 to 5: Your buyer cools off or goes unconditional, depending on their own conditions and timing.
If a second offer appears on your new place: You could receive a 48 hour notice to waive. You either arrange bridging or step aside, depending on your appetite and advice.
Settlement: With both contracts aligned at 60 or 90 days, you aim for a same day move, which is easier on the wallet and the nerves.
Every campaign has a personality, so treat the above as a sketch rather than a timetable set in stone.
Melbourne Specific Tips We've Learnt the Hard Way
Auctions Rule in Many Suburbs
If your dream home is definitely headed to auction, ask early about a pre auction private sale and whether a subject to sale would be entertained. If not, start modelling a bridging finance plan so you can bid with confidence.
Use the State's Own Checklists
The Consumer Affairs Victoria due diligence checklist is a must read. It helps you spot issues such as owners corporation fees, flood overlays, or recent unapproved works that could derail your sale or purchase.
Keep the Sale Price Expectations Realistic
If your clause says you must achieve 'a satisfactory price', define what that means in numbers, not vibes. Your conveyancer can help you phrase it so it is fair and workable.
Mind the School Zones and Tram Lines
In Melbourne, a few hundred metres can make a startling difference to demand and, therefore, how fast your current home sells. Build some buffer into your dates to allow for a second open or a mid week inspection if needed.
Stay Human with Your Seller
A short, sincere cover note with your offer, explaining your sale timing and why you love the home, can make your conditional offer feel safer. People matter.
Frequently Asked Questions
Can I make a subject to sale offer and a building and pest offer at the same time?
Yes. They serve different purposes. One deals with your ability to sell in time, the other with the physical condition of the property. Time the inspection condition so you can resolve it early and reduce uncertainty for the seller.
Does the three business day cooling off apply to me if I have a subject to sale clause?
If it is a qualifying private sale, yes, cooling off is available irrespective of your other conditions, subject to the statutory exceptions. The fee is $100 or 0.2 per cent of the price, whichever is greater. Auctions and certain buyers or properties are excluded.
What if the agent says 'no conditions'?
At auction, that is normal. For private sales, you can propose conditions, but the seller can weigh your offer against an unconditional one. Good drafting and proof that your place is truly 'sale ready' can make a conditional offer more attractive.
If I receive a 48 hour notice, do weekends count?
Most clauses refer to 'two business days'. Your clause should define business days and the method of service, so there is no argument about when the clock starts and ends.
Common Mistakes to Avoid
Vague Triggers
'Subject to me selling my home' is too woolly. State the address and whether you must sign a contract or be unconditional by the due date.
No Plan B for the 48 Hour Notice
Talk to your broker about bridging or other options before you sign, not after the notice lands.
Ignoring the Section 32
A clean, complete Section 32 is essential reading before signing. Ask us to check it.
Misunderstanding Deposits
Your money sits in a trust account. Early release has strict rules. Do not assume it is available or automatic.
A Quick Note on Tone, Pace and Wellbeing
Buying while selling is a juggling act. You are lining up photographers for your current place while daydreaming about a new kitchen in Brunswick East. It is normal to feel pulled in two directions. Take breathers, ask what is reasonable for you and your family, and remember that a subject to sale clause is a tool, not a test. Used wisely, it reduces risk and keeps your options open.
Final Checklist Before You Sign
- Do you have the special condition in writing, tailored to your situation, not a generic template
- Have you agreed clear dates for 'sale' and 'unconditional' on your current property
- Are the 48 hour notice mechanics workable for you if a second offer appears
- Have you reviewed the Section 32 and the Consumer Affairs due diligence checklist
- Do the finance timelines align with any requirement to waive your condition
- Do you understand how your deposit will be held and when early release could occur
Conclusion and Next Steps
If you are weighing up a subject to sale offer in Melbourne, you do not have to choose between haste and hope. With the right clause, sensible dates, and a plan for the 48 hour scenario, you can move towards your next home without gambling the roof over your head.
We can help. Pearson Chambers Conveyancing will draft the clause to suit your real life, review the Section 32 for free, and coordinate with your agent and broker so everyone is pulling in the same direction.
Email contact@pearsonchambers.com.au for clear advice and a complimentary Section 32 contract review today.