The property is Sold STC – what does this mean?

Estate agents love to use jargon.

Sometimes they try to describe things to you before you make an offer like OIEO or OIRO. Other times they want to communicate something else later on.

Sold STC is a very common phrase you will see stuck on property adverts.

What does Sold STC mean?

Sold STC is shorthand for Sold Subject To Contract.

The offer has been accepted by the seller, but there is no legally binding agreement to force the buyer to purchase the home at this stage.

To understand why estate agents use this terminology, it’s important to get into their mindset.

Example of how Sold STC setting comes about

Pamela is 42 years old. She prefers people call her Pam (but never Pammy). Pam worked as an environmental consultant for a large multinational corporation in Leeds. Through hard work and some very long hours, she ascended up the career ladder.

It wasn’t easy – she faced a number of challenges in her company from other colleagues, most notably harassment. Fortunately, Pam cut through the misogyny and whilst others were eventually culled away for their actions, she was recognised as a key player in the organisation. With more responsibility came higher salaries and Pam used these funds to buy her first home.

However after spending 12 years in a senior management role, it all came crashing down.

She was aware her employer had taken a drastic U-turn on environmental issues following a change in leadership. Instead of sourcing from environmentally conscious suppliers that she recommended, they instead went with cheaper materials that turned out to be toxic. This infuriated Pam – and a fresh start was needed. So she decided to put her home on the market with the local estate agent.

Pam had a large 3 bedroom flat in a highly desirable city centre location and so she was confident the home would sell. She particularly loved the freestanding Nordic bath that she installed – a real differentiator in the market.

Being a savvy woman, Pam knew about the number of offers on homes that fell through. She wanted the best price for her property, but also recognised that she could lose valuable time waiting out for a higher offer.

She ended up accepting a competitive offer from a first time buyer – who she gravitated towards due to their ‘no chain’ status (a key tip from our Buyers’ Checklist).

The agent respected Pam as a client and understood her situation of wanting to move away from Leeds as soon as she could. Having a sale fall through would be a real setback for Pam. So the agent decided to create a happy medium between protecting Pam’s interests and respecting the buyer’s intention to purchase the home.

The agent therefore decided to keep the property advertised on the portal – with a tag of “Sold STC”.

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What happens after Sold STC?

If a property is listed as Sold STC you can expect the following

The agent will update the property status on key advertising portals (Rightmove, Zoopla etc)
You need to instruct your solicitor to begin legal work with the seller’s solicitors (this is when you have to start paying for various costs, such as local authority searches)
You will need to get the mortgage approval process going with your lender

When both parties are happy with the sales process, you will proceed to exchange contracts. When exchange has occurred, both buyer and seller are committed to the deal.

If the sale moves to the exchange phase and one party decides to pull there are very large fees to pay the other side in addition to the loss of 5-10% deposit. Because of this, if you make it to the exchange stage you are highly likely to complete on the purchase.

Does Sold STC Mean My Property Is Reserved For Me?

Unfortunately, other buyers can still make offers on your property. If another offer is accepted, you will be out of the running for buying the property. This is known as gazumping.

The attitude of the estate agent will be crucial. It costs the agent time and money to arrange their own staff for viewings – and so they have very little incentive to continue viewings once a property status has changed to Sold STC.

But the seller’s agent is legally obliged to communicate all offers to the seller – even if another offer has been accepted.

This means that if other buyers decide to come in with offers higher than yours there’s a chance you will lose the house.

If you do find that you have been gazumped – there’s a high chance that you won’t be able to get back money for the costs of surveyors, solicitors and mortgage brokers. We would recommend looking into home buying protection insurance to cover some of your costs. We explain in this post that the insurance will not cover every event, but does give the buyer protection against some scenarios.

In some rarer circumstances both buyer and seller have been known to enter into exclusivity agreements. This adds another layer of protection for you as a buyer. All agreements are different, but many essentially mean that provided you buy the property within a specified time frame you cannot be gazumped.

How Long Does It Take Between Sold STC And Exchange Of Contracts?

This is usually the longest gap in the buying process. After an offer has been accepted and the property has been listed as Sold STC your solicitor will start the conveyancing process – which involves looking through deeds, searches and other matters.

The gap between Sold STC and exchange of contracts can normally be done in 8-12 weeks (which is already a big range). Sometimes the whole process can be done smoothly and swiftly – but don’t assume there won’t be hiccups along the way.

Why Bother with Sold STC If I Can Still Get Gazumped?

Although marking the property as Sold STC doesn’t protect you against gazumping, it does decrease the odds significantly.

The only real scenarios that lead to gazumping after the property is listed as Sold STC are the following:

The seller is frustrated with the current pace of the sales process with you as a buyer and wants to try another.
You secured the property with a heavily discounted offer, and other buyers are prepared to offer a higher price and accept a lower discount.
The property has desirable characteristics that are not common with others, increasing the interest from others (think things like big gardens, high specification, ideal location)
Another buyer has an emotional attachment to the property that is something other than price. For example, some buyers fall in love with the style of a building and pay over the odds for it.

Can the seller pull out of the purchase once the property is Sold STC?

Yes. Until both parties exchange contracts, the seller is free to pull out of the process at any point. However this also works both ways – you as a buyer can also decide to pull out of the process (for example if you discover additional repair work would be needed if you proceeded with buying).

Would I ever want to pull out at the Sold STC stage?

As frustrating as this sounds for a buyer – you might want to pull out before exchanging.

Consider the following situations for your dream property

A survey reveals the building turns out to be structurally unsafe and at risk of falling down
The seller did not have the right to sell you the property
The bank decides the home is worth less than agreed and is only prepared to give a smaller mortgage
Local searches show problems with the location

Would you still want to be committed to pay several hundreds of thousands of pounds for something that turns out is unsellable?

Can I Make An Offer On A Property That Is Sold STC?

Yes – in the same way someone else can try to steal the property you’ve set your sights on, you can also make a rival offer for other homes that are Sold STC.

How Many Sales Fall Through At The Sold STC Stage?

Rightmove estimates approximately 15% of Sold STC properties eventually come back onto the market. This is roughly about 1 in 7 – so it is a common thing to see!

Our View

A Sold STC sign can be helpful in staving off the competition. It gives you as a buyer the breathing space to start the sales process.

Importantly, the Sold STC sign does not give you exclusivity over a property, and it shouldn’t stop you from pulling out of a house sale either.

Research from the HomeOwners Alliance shows 12.5m UK households have regrets about the homes we buy. It’s important to think through all of your housing needs when moving forward with a property purchase. We list the top 3 choices to make in 2021 for your first home purchase here.

Once your offer has been accepted on a home, make sure you bookmark the Rightmove and Zoopla listings that your home was previously marketed on. It is always worth checking these periodically to make sure the seller and agent are sticking to the rules of engagement and the property continues to be marketed as Sold STC.