When carrying out a property search in any online or offline location, you will probably come across the phrase ‘Sold STC’. The STC part stands for ‘Subject To Contract’ and means that the property owner has accepted an offer from a prospective buyer, but the paperwork and other processes needed to make the sale legally binding has yet to be completed.
This is the basic definition, but it is a little more complicated than it appears on the surface. You should also bear in mind that although ‘Sold STC’ is a standard phrase that is used throughout the property industry, some estate agents choose to use different terminology such as Sale Agreed. You may also encounter the phrase Under Offer, which is similar but with one key difference. It means that an offer has been made by one or more prospective buyers but the seller is yet to accept. Essentially, it means the property is one step behind being sold STC.
It’s important to know the difference between ‘sold STC’ and ‘under offer’ to understand the stage that a sale is at. However, in real terms, the difference is purely semantic as you’ll find out in this article.
What does Sold STC mean for the seller?
For a seller, having a property progressed to sold STC status means the home is effectively taken off the market. However, it is not entirely removed. Your estate agent’s website, every property portal they listed the property on and even the ‘For Sale’ sign on your doorstep will all be changed to include the ‘Sold STC’ label. But the property will still be listed, visible for all to see when searching the market. Therefore, it is more appropriate to consider sold STC as a status update rather than a removal of the property from the market.
When the property is labelled as sold STC, the conveyancing process can begin. Your solicitor will liaise with the buyer’s solicitor to work towards the transfer of ownership once the status has been updated.
What does Sold STC mean for the buyer?
If you’re looking to buy a property, sold STC means you have had an offer accepted and can move on to the stage where your solicitor gathers the necessary information to complete the purchase. Surveys and searches will be carried out and all the necessary questions will be asked in order to obtain a full picture of the property and any problems that may exist.
This stage takes time and can be frustrating for the buyer, but it is essential to do it before contracts are exchanged. Once that sale becomes legally binding, there is no way to pull out of the deal, so you need to be 100% certain that the property is right for you before making the big financial commitment.
You’ll want to move things along as quickly as possible and meet any obstacles head-on, so this is the time to be proactive. Don’t be afraid to chase your solicitor and agent if you feel things are taking longer than they should. If you are asked any questions then be sure to answer them promptly to avoid the process stalling.
Can other buyers make an offer on a property that is sold STC?
Unfortunately, at the time of writing, there is no legal barrier to stop further offers being made and accepted once a property is listed as sold STC. The word used to describe this process is ‘gazumping‘. Though there is no law to prevent gazumping in England and Wales, the practice is frowned upon as unfair and immoral and we strongly advise against doing it.
Having said that, if a property is still listed on property portals and the estate agent’s website, there is always the chance that interested parties might get in touch to learn more about how the offer is proceeding. There can be any number of reasons for a sale to fall through, so agents will keep the details of these interested parties on file to contact in the event that the current buyer pulls out of the deal.
One important thing to know is that the seller’s estate agent is legally obliged to pass on any higher offers to their client. Their contractual obligation is to work in the best interest of the vendor, not the buyer. If a higher offer comes in after having previously accepted an offer, it falls to the vendor to decide whether they will remain committed to the original buyer. Unfortunately, sellers will sometimes be tempted by the higher offer and go on to accept it.
What this means is that even if a buyer has an offer accepted and the property listing is changed to sold STC, it can still fall through. If the seller wishes to accept a higher offer after already accepting yours, there is nothing you can do to stop them. This can mean the original buyer goes through the disappointment of losing out on the property they loved and can also leave them seriously out of pocket, having already paid for conveyancing and surveys.
Why does the ‘Sold STC’ status exist?
Given that gazumping can happen legally, you may wonder what the point of listing a property as sold STC is. Though gazumping does happen, the reality is that the likelihood of it happening is extremely small and the sold STC stage is beneficial for both buyers and sellers.
Remember that the option to pull out of the deal is available to the buyer as well as the seller during the sold STC stage. This offers some protection to the buyer as well, even if it can leave them feeling a little vulnerable. If, for example, the survey reveals that there are issues with the property, the buyer can pull out or attempt to renegotiate with the seller for a lower price in light of the cost of resolving the issues.
The sold STC stage enables both the buyer and the seller to keep things open until both parties are satisfied with every aspect of the sale. Only then will the process progress to the exchange of contracts.
More advice to avoid gazumping
Being gazumped really is a horrible position to find yourself in. It’s highly unethical but it is not illegal, so buyers will want to do their best to avoid it happening to them.
Buyers are advised to consider not settling for the sold STC status. You could ask the seller to have their agent take the property off the market fully. This will offer maximum security, but the onus will be on the seller to demonstrate that they are in a suitable position to make good the offer they have made.
There are various other measures a buyer can take to reduce the chances of being gazumped. We have written a detailed guide on gazumping so please head over there to learn more about what you can do to protect yourself.
If you have plans to buy a property and you need a mortgage, get in touch with Think Plutus. We are a leading mortgage broker with a team of professional advisers who can help you secure the right mortgage to realise your property goals.