I've received this question many times from buyer clients that I'm helping, most recently in an email, so I thought it would be a good idea to cover this in a post. Whenever I write up an offer for a home, there are dozens of questions that come up during the process before we even submit the paperwork to the listing agent. This particular question typically arises after we've parted ways and ev
erything is signed.
So, is it a good idea to place a "fuse" on your offer, forcing a quick response?
In my humble opinion, it's rarely necessary to do so, although I can understand arguments in favor of this strategy.
My normal response is this: You certainly can restrict the timing for acceptance by forcing the seller to respond quickly (e.g. "Seller to respond by 5pm Tuesday, January 25th, or this offer is void."), but I feel that it comes across as pushy in most cases, since a typical seller is probably sufficiently motivated to respond within 24 hours regardless, unless they're traveling or experiencing a crisis of some sort.
With that in mind, give some thought to the message it sends when you opt to place a deadline on any offer. It might set the wrong tone during negotiations and during the entire process, depending on the personality of the seller. It also could come across as a little desperate, or weaken the offer and your leverage. Patience is your friend when it comes to negotiating.
There are really only two instances which immediately come to mind under which I would counsel someone to use a deadline approach:
- You're pretty sure that there's another offer on its way (or more than one)
- You have very limited time to choose a home, and there's a solid backup house in mind that you don't want to lose while you wait for a response
I suppose you could add a third category here if the listing agent is notoriously slow to present offers based on your agent's prior experience, but I've only had that happen once to me in 14 years of full-time sales.
The longest I've ever had to wait for an initial response was 3+ days, which was maddening for my clients, frankly, but also exceptionally rare overall.
Since the other question I hear often is, "When do you think we'll hear something about the offer?", I should probably address that here as well. As a guideline, if I send an offer in the morning, it's possible to hear something the same day, if the agent is able to get in touch and present it quickly. If I present an offer to the listing agent during evening hours, we'll probably hear back sometime the next day, either with a response or with clarification questions, etc. If it's a weekend, I typically tell my clients to expect to hear back by Monday.
I hope this helps! Let me know if you're looking to buy or sell a home anywhere in the Austin metro area. I would love the chance to help you find the right place.
Thanks for reading!
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Jason, great explanation. I don't use the "deadline" either. I tell my buyers that, with any luck, we'll hear something later today, but a lot of times the sellers want to "sleep on it", and we'll more than likely hear from them tomorrow.
Good post Jason. I sometimes forget just how different the real estate market in Central Florida is from the rest of the world. Using the deadline is very necessary here do to the fact that almost 75% of our sales are distressed. Banks aren't known for their speed and efficiency. LOL. The second example of when to use the deadline is the main reason I use it on almost all the offers I write. The banks usually take 1-2 weeks to accept an offer. And during that time my buyers would be stuck on the hook just waiting for the bank's answer. As it is we put the deadline in and if we find a house they like more we write that sucker up. The buyer always has the option to withdraw the offer or, if the bank gives a verbal acceptance, they have the option to go ahead and move forward with the original offer.
I started in the business when this market was already mostly distressed properties. So I had to learn quickly what works with the banks. But I haven't thought of it in the context of regular sellers before. You opened my eyes here. Thanks. :)
This is a great post and your approach seems to make a lot of sense. I actually bring this up with our buyers and go over the pros/cons about putting in a deadline. It's fairly common practice here but I have used it and ticked off some sellers ( deals closed though ). I am a pretty friendly and easy going guy, so I try to communicate our position in a nice way with the listing agent that we don't want to rush the seller, we just want to hear something from them within a few days, even if they say " we need some more time". Thanks for the post.
I just had to wait 6 dayss for a counter! Crazy stuff. This was unusaul and I agree with you that most answer quickly.
Jason, I agree with you for the most part. I do however use this often in my market to get a timely response. I believe that the seller knows what they will take the day they list a property, so what takes a day or two to figure out?
Jason - I'm a pretty patient buyer's agent and generally I get an answer back swiftly, even with seniors who do not have computers, international buyers and sellers. Every once and awhile there are agents who do not recognize the deadline or completely ignore that "time is of essence". Recently, after the agent gave me a verbal acceptance, I provided a signed offer the same day, it took a week to get word that the seller accepted another offer.
Hi Jason. Standard procedure here too. We call it the Irrevocable time and it is pre-printed on our Agreement/Offer. We would normally provide 24 hours for the Seller to respond and 48 hours on the weekend. Of course every offer is different and I did one yesterday with a 3 hour window. I had an accepted offer back before the 2 hour mark hit :0)
I love reading how each market is as different as the next.
UPDATE: It isn't seen as 'a demand' because the Seller also provides a time limit with his counter offer. It is seen more as a courtesy to allow both parties to move on.
My sellers had to wait a week once to hear the buyers' response to our counter offer! My sellers got so antsy and anxious that they started negotiating against themselves! "Melissa, call them and tell them we'll lower to XXX!" I had to tell them to relax...it wasn't like we had any other offers in the wings.
Very interesting, Jason.
In Florida, "Time for Acceptance" is standard operating procedure.
Florida Association of Realtors and FAR/BAR Contracts have Time for Acceptance as a clause in the contract. Tallahassee Board of Realtors and Naples BOR Contracts have blanks for the Date and the Time in AM or PM.
My question to you, Jason, with respect - what if you "don't hear back"? Is the Offer not indefinitely "out there" until rescinded in writing by the Buyer?
I don't like to see deadlines or use them. Nothing beats good communication with the other agent. It can be explained the reason for a deadline but I find it is more of a threat in writing.
Margaret
Our purchase agreements in California have a built in 3 day time frame. Every once in a while it is necessary to shorten the response time for certain reasons such as you mentioned.
Jason - In Ontario, our standard forms have irrevocable dates and times. Susan Emo in #7 had discussed residential offers in her area. My area tends to use a variety of deadlines for residential. For commercial, irrevocable deadlines tend to be longer.
Jason,
This explains allot.
There is a time and place for open end offers, but not for home buyer's.
The time frame for a seller's response has to be individuallydetermined, not by common pratice. If the seller is local and available 4 to 24 hours is sufficient. If the seller's are not readily available it takes longer. How long are you going to put your buyers lives on hold?
How long depends entirely on who you are and how well you represent your clients! People make excuses, but I've closed even with out of town sellers sellers in 5 hours, yes I said hours by giving them an hour to accept the offer and another 2 hours to sigh and deliver the deed! I saw the house at 10am and recorded the deed at 4pm the same day. The buyer was in Kalamazoo the sellers in Denver, but that's a long story, you have to know how thinks work. I've given banks hours instead of weeks, they preform if you writhe the rules and work from the top down.
Our current short sale delays are because early on the Agents shirked control! There is always more than one way, for those that take control!
If you write the rules you're never a victim of other peoples rules! Nether are your fiduciaries!
Some may believe luck is the determining factor regarding who wins and who loses, to prove it ask any looser! The only luck invovled is finding the right agent.
Bill
Great post Jason, sorry i haven't "stopped by" in a while. I do use a deadline, but not a RESPOND NOW OR DIE one. I give 48 hours usually and say that the buyer MAY void the contract after that date. This still leaves them free to continue to shop if the seller doesn't give an answer back in a timely manner. Though it also gives them the opportunity to accept it if the seller does respond after the deadline.
As a buyer's agent I always write in an "offer good until 'date and time' and thank you for your prompt response". I always have a cover letter so maybe it helps ease along a definite schedule and process. If you don't then you are not free to move to the next offer! I don't think it is pushy at all, it communicates that the buyer is actually buying a house from the many choices available on the market. I think it shows professionalism.
It may be a matter of practice in an area...as a listing agent I think it's fabulous to have a "respond by" time and date.
If you are dealing with REO's you if you put a 'fuse' on your offer, you may have your offer go bye - bye. We waited 2 weeks to hear formally that my buyers got their last offer accepted.
Jason - some pretty sage advice here. It is rare that I recommend putting limit on it, and certainly it can backfire. In a fast moving sellers' market, yes, but otherwise I am not sure it really works the way people hope for.
Here in CA offers are null and void after 3 days if there is no date specified...but of course one can continue on in desired. I would never recommend it in the case of shorts or REOs. Too much competition and you are dealing with someone who does not pay attention to dates anyhow.
Jeff
This is spot on Jason. Great explanation. I love the detail you give especially trying to second guess when the other agent will respond to your offer. Nice post.
I also get this question a lot and the same thing. I normally will say no for the reasons above. Its been a while since I have put a deadline on an offer.
Well said, I just hit the suggest button.
I don't like it when this demand is in the offer.
Jason,
I agree with your two reasons to use the deadline. Yet in Colorado, using the deadline is kind of the norm. Of course, reasonable timing is always recommended... g
In Arizona I deal almost exclusivley with REO's, so a deadline is necessary. However, because our market can be fast paced when a house is priced right, I still use a deadline on a traditional sale to give my buyer the best chance of receiving a positive response on their offer. It's enlightening to see the different markets, I never knew a deadline could be an upsetting thing...
Eric - That's pretty much how I handle things with my clients, too. :)
Nate - Obviously, I can only speak for what works in our local market. I can understand the need for a deadline in your area and with the composition of properties that you sell. Thanks for stopping by, my friend. :)
Dan - It's pretty rare that I see it used here, but sometimes I encounter it as a listing agent. It never fails to add a bit of stress to the process for my listing clients, usually with no reason for the deadline. I would always want to hear something within a day or so, unless it's a bank-owned or corporate-owned property, with multiple layers of red tape involved. The norm here is to get a response within the first day, which is why I don't use the deadline approach unless it's absolutely necessary.
Navona - That is WAY too long for a response. I think the longest I ever waited was just over 3 days for an initial response, as I mentioned above.
Damon - I understand. Markets differ, of course. I wonder if you would get swift responses with or without using the "fuse" approach?
Petra - Sorry to hear about your recent experience. That is ridiculous and unprofessional, in my humble opinion. Some agents are simply not that good at what they do. :)
Susan - That's really interesting to hear. In Texas, we don't have specific timelines for acceptance, or automatic expiration of offers, etc. As I said above, though, the longest I've ever had to wait was just over 3 days, which felt extreme. In most cases, I've found that when buyers insist on including a deadline, it makes things more adversarial from the outset. It sounds like you have a promulgated form which is "fill in the blank" for this part?
Melissa - I have used that term many times before with buyers and sellers - "negotiating against yourself". Waiting a full week to hear back about a counteroffer is nonsense. Did those buyers end up closing on the property eventually?
Fred - As I mentioned in my above response to Susan, we don't have this feature in Texas, but I do understand the need or procedure in other areas. To answer your question, if we don't hear back, the first step is to determine why we haven't heard anything yet. I would be in contact with the listing agent (communication is critical in any transaction, IMO). You're right - the offer would technically be "out there" indefinitely, but it would only be a valid contract if the seller signed it with NO changes at all. Additionally, our contracts feature an option clause which allows the buyer the unrestricted right to terminate during the option period, which doesn't begin until the execution date. With that in mind, the buyer would only be risking the option fee, which is typically $100 or so. One last point (not to beat a dead horse): the offer includes a proposed closing date, so it would be difficult to make the case for accepting an offer with no changes beyond that date. :)
Margaret - I'm not surprised to hear that you agree with me. :) I like your phrase, "a threat in writing". I might use that one.
Cameron - It's interesting to see how many other markets have built-in timelines for acceptance. Thanks for stopping by!
Hi Marc - I actually responded to you on the re-blog of my post by Susan Goulding. We don't have timelines here, but I can understand that markets vary widely on stuff like this.
Bill - I see that I have ignited your passion on this topic, even though we clearly disagree. I also applaud you for getting such quick responses. With regard to fiduciary responsibilities, I feel that part of my job in representing my clients effectively is to help them get the property that they actually want, rather than asserting my own control into their purchase scenario. Negotiating is an art form to me, and I'm very good at it, even if it does sound like I'm tooting my own horn. I sincerely appreciate your perspective, my friend, even if our approaches differ. Thus far, after 14 years of sales, I don't think you would be able to find a single client of mine who would feel inadequately represented during their purchase. Thanks very much for your thought-provoking comment!
Jimmy - In a handful of cases, I've done the same thing. I think it's best to allow flexibility for your buyers if you choose to use the deadline (voidable vs. void). Good stuff!
Leslie - Clearly, some other markets are just plain different from ours here in Austin. I see the deadline on perhaps 10% of the offers I receive as a listing agent, and I use them even less often for buyers that I am helping. Part of the reason that I don't feel overly bound to wait very long or that we are stymied by a slow response is the fact that we have an option period in Texas that allows the buyer the unrestricted right to terminate the contract after the executed date, with a cursory sum of money paid to the seller (around $100).
Susan - Makes sense to me. Thanks again for re-blogging this post!
Jeff - It sounds like you handle things in much the same way that I do. I'm not surprised. :) We don't have the automatic expiration here, but buyers also don't risk very much if the offer is accepted later.
Christina - Thanks very much! Glad you enjoyed it!
Chuck - It sounds like you and I work in a very similar way. Thanks!
Richard - Thanks for suggesting this post! Much appreciated.
Gordon - It's not the norm here, which is probably one reason that I rarely counsel buyers to use it. Thanks for stopping by!
Diana - That's understandable in your market, and I used them a few times back when things were moving really quickly. I still occasionally use them, but only for the reasons I outlined above. With regard to the "upsetting" part, I think Margaret Rome's comment above hit the nail on the head. As a listing agent, it feels like a threat in writing. This, of course, is dictated by the norms of our local market, since it isn't that common here.
Jason,
Great points, I have put deadlines in and continue to do so based on the situation at hand. It surprises me how many sellers will drag the process out. Many times that one line will get the ball rolling or we can move on.
-Brent
Jason, I thought about your post some more and came back to see it featured, congrats.
I am interested by the different responses...what some people consider "reasonable" and "normal" other people consider to be rude. I do a lot of relo work and always try to stay alert to what clients from other areas think is normal. One buyer says "well of course you things this way" (based on her experience in Atlanta) and another buyer says "I want you to do this" (based on his experience in Boise). But even downtown Chicago is different from the suburbs!
Thanks.
Arizona being a "time is of the essence" state, an offer must have a response time included for the instrument to be legally binding upon ratification. An open ended offer could theoretically get tossed without it upon challenge by one of the parties. Typical to allow 24-48 hours. I actually prefer the practice as SOP. Keeps the seller honest (can't sit on the offer while shopping it around) without coming across as pushy. Now if it weren't a local standard / legal requirement, I might feel differently.
Jason:
Its interesting to hear how different states handle response times differently. As Cameron, #11 mentioned, here in California we have a default 3 day response time. My clients and I have shortened that time several times due to an agent's habitual slow response, otherwise we use the 3 day default time.
Evelyn Kennedy, Alameda, CA
I agree with your explanation and pretty much tell my clients the same thing. And IF it is a repo, you might just as well not even think of putting in an expiration date/time.
I had one that took two weeks to put together and the responses were 2-3 days apart. The problem stemmed from my single great looking buyer was attracted to seller, who also was single and extremely beautiful. He saw a photo of her! That's all he saw but for some reason ... it took us two weeks to pull together. He closed the condo and then he closed the deal with her and they are married. I have never seen anything like this!
However, I have come to a stand still when I am the listing agent and have suggested to my sellers that they write a counter-offer to get things moving in case there was a misinterpretation somewhere via the buyer's agent. It worked. The buyers countered on their contract and canceled the seller's counter.
It all depends upon the agent here in Chicago. Some just don't know how to confront and counter better yet communicate to get their clients to understand. Good comments.
Jason, I have heard the answer to this both ways, putting it in the Special Provisions section. In other states it is very commonplace from what I understand.
Jason, we always use a deadline. Normally allow about 24 hours. For REO's, relo's etc., we allow more time. Happy selling to you in 2011!
Jason, I don't use the deadline either. And there's only been a couple of times that I wished I had.
I use a 24-48 hour deadline - there normally isn't more time required to respond.
YES if you think another offer is coming. Otherwise, it depends on how long! I had one seller who went way way way out of touch on vacation. As soon as he left, of course, we got an offer. He had told me he had no cell access for 2 weeks in "the bush." The other agent was so mad at me! I know he thought I was putting him off for hope of more offers. In reality the seller really did call me as soon as he could, although it was over 1 week later!
I have a situation where we have waited a week for a payoff on a multiple contract listing. No answer can be given in this case until the payoff is known so the time frame is longer than norm.
We put a date and time deadline on our offers.
Love Barb's story above (#29). Great post, Jason.
Jason - This is solid advice. I think the popularity of offer deadlines is regional. They are popular in my part of Florida, but I agree, usually not necessary. A misconception, too, is that the seller has to respond by the deadline. They don't.
I do the same things only when necessary for out of town buyers that have one trip in. And it multiple offers are coming. Our contracts have time is of the essense already in them.
Great "Dude" edge! And interesting article. I generally support framing but I can see where it may also cause problems.
Thank you,
Richard Acree
HABITEC Home and Building Inspections, LLC (Nashville, TN)
http://habitecinspections.com
We have three days built in to our California Association of Realtors contracts. Sometimes we use shorter timeframes for the reasons you mentioned above.
Hi Jason. As some have already noted, CA purchase agreements are preset to three days, but I’ve never had that be an issue… from either the buyer or the seller.
Jason, I've noticed that some agents are putting 30 day deadlines for short sale acceptance from lender. What if it takes 60 days? Putting a deadline is forcing the issue. Bad negotiating, IMO.
Jason,
I rarely if ever put a time limit on my offers. The only reason I did this past month on one was because we were on a short timetable to get a home under contract since the buyers are relocating here from VA and their home was under contract.
One problem with using such deadlines here, besides the problems it can cause in negotiations because the buyers come across from the get-go as demanding, is that there is no place on our contract form for such, and if you write it into special provisions, well, it has no authority whatsoever, any more than ANY part of the contract has any authority until both parties have signed off on it. It's not a contract until both parties have agreed to all provisions, in writing. A lot of agents, sadly, don't get that that's what "contract" means.
Now, putting a request for a prompt response in a cover letter/email usually does the trick without creating an adversary situation right off the bat. And usually is either complied with or a good reason why not provided.
I'm rarely requested to do this, though, usually only by buyers who come from another state where this is normal. Once I explain the downside of doing this, they usually see the light.
I agree, Jason, that part of our fiduciary duty is to get the client the house they want. This takes priority over any perception of ourselves as a "tough negotiator".