In real estate contracts, time is of the essence. This means that the contracts contain hard and consequential deadlines for when certain things must occur. A favorite tactic of buyers is to set a very quick offer expiration on their offer to try and force a quick response from the seller. Will such a tactic work? In a lot of cases, no.
Offer, counteroffer & acceptance
When you make an offer to purchase a home, the seller may reject/ignore your offer, accept it or change the contract. If the contract is changed, it becomes a counteroffer, voiding the original offer and starting a new expiration deadline. Contract acceptance does not occur until both parties agree and sign all terms of the contract. If the recipient of an offer accepts the contract after the expiration date has passed, it it not an accepted contract. It becomes another counteroffer. The other party must acknowledge the acceptance because their original expiration date has passed.
Contract expiration deadlines
The standard real estate contracts in Washington State specify that offers and counteroffers expire in 2 days, not including weekends and holidays. This is the default language, but either party making an offer or counteroffer can customize the deadline to their own liking. Contract language and customs vary by location, so it may be done differently where you live.
If you have made an offer or a counteroffer, you have the ability to withdraw that offer at any point prior to expiration as well.
Can you pressure a seller to accept your offer quickly with an ultra-short offer expiration?
Say a great home comes on the market today. You see it in the morning and immediately decide to write an offer. Your offer is submitted by 2PM and is set to expire at 9PM so that the seller has to respond that same day. Will this work? Unlikely.
- Market exposure for a few days works to the seller’s advantage – The prudent seller knows that they need a significant batch of people to come through the home. The seller can drum up competition and get even better offers by allowing a few days for buyers to get out there to see the home.
- The seller knows you want the house – If you make a great offer on the first day a home is listed, chances are extremely high that you’ll make a great offer 2-3 days later, perhaps an even better offer if faced with competition. As a seller, I would be concerned about a buyer who is only interested in making an offer valid for a few hours. It shows a lack of commitment to that particular home.
- The seller may not be available on your schedule – Sellers have lives outside of selling their home. Sometimes they live in different time zones or countries. Reviewing offers, particularly if there is more than one, requires them to be available for a block of time. If the listing agent has specific instructions on when the seller will be available to review offers, in most cases you should follow them.
- Is your offer truly exceptional? – If a seller anticipates that multiple parties will be interested in offering on the home, taking an urgent offer on the first day on market rarely makes sense. That offer must be so great that the seller has no remorse about accepting it.
Offer expiration really only matters when you are prepared to accept the contract
When you receive an offer or counteroffer that you are prepared to accept as written, the expiration deadline is critical. If you sign and return the contract prior to expiration, you have an accepted contract that is binding on the other party.
When you make a change, even a small change, to the contract, it becomes a counteroffer that is not binding on the other party until they accept your changes. Whether or not the counteroffer is sent before the expiration deadline, it is still a counteroffer that needs ratification by the other party.
Don’t misinterpret this advice. Both parties should endeavor to keep offers/counteroffers moving back and forth quickly. You want to keep the negotiation moving and to keep the interest level from both parties high.
Focus on what the seller wants
Being aggressive about making offers is critical in a tight housing market like we are in at the moment. It is easy to focus on tactics to try to force the seller into acting quickly or ignoring other parties. Neither of those are in the best interests of the seller. If you truly want a house, craft offers that cater to what the seller is looking for. As Don Coreleone would say, “make them an offer they can’t refuse.”