A Strategic Approach to Real Estate Contracts and Deadlines
By Keith Loria
Whether you’re buying or selling a home, adding deadlines to the real estate contract process is a tricky subject. After all, if someone makes an offer on your house, you may think they’ll go to any lengths to buy it. On the other hand, a buyer may think that just because they’re putting a bid on a house that’s been sitting on the market, their bid will be accepted regardless of what it is.
That’s why many real estate agents discourage their clients from putting a deadline within the contract because when they aren’t met, it becomes a frustrating endeavor.
And what happens if you place a deadline on your offer and the seller doesn’t meet it? Are you automatically going to withdraw your bid? Probably not. Bluffs don’t play very well in the real estate game, so if you set a deadline and then no consequences come from not meeting it, you may find the rest of the negotiations going the other person’s way.
Additionally, when you place an offer that must be decided on by 9:00 p.m., this will be seen by the other party (buyer or seller) as a hard-sell. While it might seem like a good negotiating strategy on your end, it might be the exact opposite from the perspective of the other party. If you want to include deadlines like this in your offer, you must be willing to walk away if they aren’t met.
That doesn’t mean the deal can’t be worked out down the line, but if you’re not going to stand by your deadline, it’s probably better to leave them out of the equation altogether. Speediness is the essential strategy here on both sides of the transaction.
When in the midst of a seller’s market, it may make sense for a seller to set a deadline for reviewing all offers, as this will alert all interested buyers that they need to have their best offer in to compete with any other offers. This type of deadline is actually helpful because buyers can view other homes and put together a bid before the deadline, understanding that the seller isn’t going to make a decision prior to it being submitted.
For buyers, negotiation techniques typically recommend that you add a drop-dead date so that the seller can’t shop your offer or drag things out forever. This will protect you from losing out on other homes that might interest you.
If you’re making an offer in the evening, be sure to make the expiration early the next afternoon so no competing offers are likely to roll in. Have your agent express that there are other homes on your list that you’re just as happy with, that you’re ready to make an offer on. In this case, a deadline can be used to your advantage.
Contact our office today to learn more about the pros and cons associated with incorporating deadlines into real estate transactions.