Deadlines, Deadlines, Deadlines: There's no such thing as a deadline.

In the real estate industry, there are no real deadlines.

How Do Real Estate Offer Deadlines Work?

When having a home for sale, it's common practice in competitive markets to have an offer deadline.

But…

Do sellers stick to offer deadlines?

Is it smart to place a bid as soon as a desirable property is found?

As a buyer, can I just set an offer expiration date so that sellers can respond quicker?

As a seller, should I accept a preemptive offer (Offer before a deadline)?

Why offer dates exist

If there were no offer deadlines in competitive homes, the selling process would be a nightmare. Offer deadlines create structure that helps understand what the current market conditions are saying about a home's attractiveness; it also creates transparency and fairness to everyone involved in the transaction.

Sometimes it’s outside of a seller's hands and sales have to be approved by the court (probate sale).

In a normal market, homes are listed for a few weeks and sellers just wait to receive a good offer that they are happy with based on comparable data.

As home buying conditions worsened, offer dates went from being two weekends on the market, to then only one weekend on the market before the offer deadline. Today, some homes are going under contract after just a single day on the market.

When there’s an offer date, as a buyer it's strategic to wait until the last moment of the offer deadline to submit an offer because you want to do things like limit the common practice of an agent shopping the offer to other agents to get their sellers a better deal. You don't want sellers to share one more offer before the deadline.

However, waiting until the deadline might not always work out. Sellers sometimes favor buyers who act quickly and decisively. A great offer can entice sellers to accept the offer.

I’ve learned that there is no such thing as an offer deadline. People change their mind all the time. Some sellers who have initially thought about having an offer deadline, get a "good" offer and then accept it.

Keep in mind that if a seller will take your offer, it's often because the terms are incredibly attractive.  Short closing, no contingencies, great price. Even if you submit a great pre-emptive offer, sellers might still decide to just wait for more offers. As much as I'd love to believe in luck and fairytales, you're not going to get under contract unless there is something attractive about your offer.

If a seller decides to wait till more offers, honestly good for them. But as a buyer, you have shown that you are committed to the purchase, it could still work out in your favor because you have built that rapport with the sellers.

Most experienced agents will educate sellers into not accepting pre-emptive offers in really competitive markets. More explanation as to why home sellers should not accept preemptive offers at the end of this article.

Expiration Date On Offers

Buyers believe they can pressure sellers into making a quick decision, so that sellers can’t play mind games or shop the offers. The rationale seems sound and logical; by limiting the time your offer stands, you're theoretically nudging the seller towards a faster response. You’re “limiting” the ability for sellers to shop your offer.

Yet, this strategy is not as effective as it might initially appear.

Imposing an expiration date on your offer doesn't necessarily expedite their decision-making process. In some cases, it might even lead to your offer being overlooked in favor of others that do not impose such restrictions. This is not a " maybe it could happen" . I see this all the time. A seller's market is called a seller's market because sellers often dictate terms.

Here's a deeper and more specific look into why setting expiration dates on offers is generally advised against and why deadlines exist

1. Creates Unnecessary Pressure

When buyers set an expiration date on their offer, it applies pressure on the sellers to make a quick decision. While the intention might be to prompt a faster response, this pressure can backfire. Sellers, feeling rushed, may react negatively to the perceived ultimatum, leading them to favor other offers that allow them more time to deliberate. The relationship between buyer and seller is delicate, and fostering a positive dynamic can be crucial, especially in negotiations. At the end of the day, It always comes down to money, but when there’s so much competition, being “ liked “ can be what gets a deal under contract if all else is equal.

A response that we’ve seen from agents after imposing an expiration date on offers are “ Sellers felt like buyers are hard to deal with “ This is usually the case when Seller agents have requested offer expiration to be longer than the usual 24 hours. Buyers can always dictate terms, but especially when sellers request more time to review, it hurts the most.

2. Limits Seller Engagement

In a competitive market, sellers often receive multiple offers. By setting a strict deadline to the offer, buyers limit the window of opportunity for sellers to engage with their offer. Sellers, especially those who are not in a hurry to sell or are weighing several options, may simply disregard offers with tight deadlines in favor of those that provide more flexibility. This approach can inadvertently eliminate a potential buyer from consideration before serious negotiations even begin.

A seller can always revive the offer by sending a counter offer with the same terms and conditions. But in a competitive market, sellers just prefer what is easier, especially when they have options.

3. Misalignment with Real Estate Dynamics

Real estate transactions are complex, involving numerous parties and variables. Sellers, when advised by experienced agents, understand the market dynamics and their position within it. There is a risk-reward that skews towards it being better for a seller to wait for more offers. Sometimes, just like in a trust sale, there are multiple people who are deciding what terms to accept, so it’s hard for everyone to sign off in a timely manner. Life gets in the way of both buyers and sellers. Buyers don’t always move quickly in deciding whether they want to offer on a house, so if a seller just chooses the first offer on the Monday after weekend open houses, sellers might miss out on receiving a great offer on Tuesday. (Time is of the essence, which is why I am always readily available). Sellers might also have plans to purchase, so they might be working on their own purchase or relocation plans that change the timing of how sellers want to respond. The reasons are endless.

Point is, the art of patience will be key.

As a seller, you should have an offer date because:

1. Maximizes Exposure

Setting an offer deadline allows sufficient time for the property to be marketed and shown to a wider pool of potential buyers. This broader exposure can lead to more interest and, potentially, more offers. Accepting a pre-emptive offer limits this exposure, potentially leaving higher offers undiscovered. You won’t have the ability to send multiple counteroffers if you don’t have multiple offers, which can allow for a more aggressive bidding scenario.

2. Creates a Competitive Environment

An offer deadline can stimulate competition among interested buyers. Knowing there is a specific window to submit offers can encourage buyers to put forward their best terms upfront. This competition can lead to higher offers, better terms, or both, benefiting you as a seller.

3. Strengthens Negotiation Position

When sellers have multiple offers to consider, their negotiation position strengthens significantly. They can leverage higher or more favorable offers against others to negotiate terms that best meet their needs, whether it's a higher selling price, a faster closing date, rent-back, or fewer contingencies.

4. Reduces Pressure to Make Quick Decisions

Accepting an offer when fresh in the market often comes with the pressure of making a quick decision, possibly leading to regrets. With a deadline, sellers have a predefined timeline to make their decision, reducing stress and allowing for more deliberate decision-making. Sellers also have the advantage of time to review all proposals carefully. This period allows them to compare not just the offer prices but also the terms, contingencies, and the financial strength of many buyers, leading to a more informed decision.

The worst thing that can happen is accepting a contingency, and a buyer wanting to renegotiate. If there were multiple offers, choosing a cleaner offer can be better than a conditional higher price.

5. Avoids Underpricing

Without the competitive insight that comes from multiple offers, there's a higher risk of accepting an offer that undervalues the property. A deadline can bring to light the true market value of the home, ensuring that sellers do not accept a price lower than what the market is willing to offer.

No listing agent or algorithm knows the value of a home. It's all speculation. I can do all the work and look and do a comparative market analysis, but as mentioned in my last article there's no way to account for offers based on emotion rather than logic.

6. Encourages Serious Offers

Knowing that there will be competition, only serious buyers are likely to make offers by the deadline. This filter reduces the time and resources spent on less serious inquiries, focusing the seller's attention on offers that have a higher chance of closing.

What if I want to make an offer on another property?

If you find a better property or simply change your mind, buyers can file a form to rescind the offer before it is accepted, without penalty. You are not tied down to that offer unless you have received a signed seller offer.

If you find something else that you like, we can always bid on another home and tell the current sellers that, since we did not get a response, we are rescinding the offer.

That’s why time is always of the essence!

Remember, you can wait all you want, but odds are you'll probably end up paying more...

Rene Perez Jr., Broker

DRE:02115618

+1(650)-420-3069