Sale agreed: but what does it mean?

If you're currently hunting for a property, you might have seen the term ‘sale agreed’ cropping up on listings.

But what does sale agreed mean? Is it just another term for ‘sold’? And can you still get your hands on a property listed as sale agreed?

Don't worry; we're here to explain all.

What does it mean when a property is sale agreed?

Sale agreed means just that – the sale has been agreed to in principle by both the buyer and the seller.

It’s important to note that sale agreed does not mean that the property has sold. When you see sale agreed next to a property advert or plastered across a ‘For Sale’ sign, this simply means that an offer has been made to the seller – which they have accepted.

You could think of a sale agreed house as being engaged, and therefore ‘off the market’, but not yet officially married.

Is sale agreed legally binding?

In England, sale agreed status is not legally binding. This means that no paperwork has been exchanged, and nothing has been made formal yet. The legal ownership of the property still lies with the current owner – the seller – although the process of transferring ownership will be underway behind the scenes.

It’s common for a refundable booking deposit to be paid by the intended buyer, which will be confirmed via a Memorandum of Sale between the two parties. Again, this doesn’t mean the property is sold. It’s just another way for the buyer to assure the seller that they’re serious and truly intend to purchase the property.

Things are a little different in Scotland, where a sale agreed property is off-limits while the transfer of ownership (aka the conveyancing) takes place.

Is sale agreed the same as Sold STC?

Some estate agents will use a slightly different term for a property that is sale agreed. It’s common to see ‘Sold Subject to Contract (STC)’ or ‘Under Offer’ on property websites. They essentially mean the same as Sale Agreed.

Sale agreed – what next?

Quite a few things need to happen between a property being sold STC and being officially sold.

These things should be set in motion as soon as a property becomes sale agreed, as the contracts cannot be exchanged without them all being completed.

They include:

• Mortgage offer finalised

If necessary, the buyer should finalise their mortgage application and ensure they have the funds required to buy the property. If there are any issues with the application at this stage or if their financial circumstances change, it can mean the buyer can no longer go ahead with the purchase.

• No breaks in the chain

The buyer will likely be selling their property simultaneously as buying a new one. This means that the buyer will rely on everything going smoothly with their sale in order to fulfil the offer they’d made on the new place.

The seller, too, needs to complete their onward purchase simultaneously to avoid any hitches in the process.

• The conveyancing

This essentially involves the legal transfer of ownership and will be dealt with by a conveyancing solicitor, including gathering of deeds and title documents and generally collating the important paperwork to do with the sale.

• The house survey

The house survey involves a building check conducted by an expert to ensure everything is as it should be and that the house is worth the asking price. This stage can throw up some unexpected results, particularly with older properties, and can delay or prevent a house move.

• All costs paid

The deposit, estate agency fees, conveyancing fees, mortgage fees and all other costs associated with the move must all be cleared by the buyer.

• No pulling out

While a property is listed as sale agreed, the buyer can still pull out at any time. This can be for any reason – whether the result of an adverse search, a change in personal circumstances, or financial reasons.

The seller can also withdraw the acceptance of their offer if they get a higher one or should anything change on their end to lead them to no longer want to sell their house to the buyer.

As you can see, there are a lot of moving parts involved with getting a property from sale agreed status to sold. If you’re the buyer, you might be feeling a little nervous during this time in case something happens to thwart the transaction.

Can you view a house that’s sale agreed?

There isn’t a rule against this, although it will be up to the seller’s discretion. Often, a seller is happy with the buyer they’ve got and won’t want to upset the apple cart by pulling out of their original agreement, even for the promise of a higher offer.

Some sellers, though, will still be happy to show around a prospective new buyer right up until the exchange of contracts stage – especially if they’re a chain-free or cash buyer.

Can you make an offer on a house that’s sold STC?

It won’t win you any friends, but it's technically possible (as in, legal) to make an offer on a property that's sold STC or sale agreed. If your offer is higher than the offer that’s already been accepted, it might tempt the seller to pull out of their existing agreement and accept your offer instead. This practice is known as gazumping.

According to the Home Owner’s Alliance, gazumping is on the rise. This is reflected in a general trend in more ruthless behaviour in real estate as a result of a high demand for properties, especially in the wake of the COVID-19 pandemic.

Therefore, you could still lose out even after having your offer accepted, meaning the mortgage arrangement fees, conveyancing fees and even removal company’s fees will be lost, as these types of upfront costs are non-refundable.

The only sure-fire way to ensure you won’t be left out of pocket is to protect your move with Home Buyers Protection Insurance, which will enable you to claim back thousands in upfront fees should something happen to derail your move even after the property becomes sale agreed.