How Much Time to Accept an Offer?
Agreements of Purchase and Sale have what is called an” irrevocable clause” that states the following:
“This offer shall be irrevocable by (buyer/seller) until.......................on the .................................. day of ................................................ 20 ........., after which time, if not accepted, this offer shall be null and void and the deposit shall be returned to the Buyer in full without interest.”
What if the Irrevocable Expires? So the buyer’s offer has a specific time period for the sellers to accept the offer that’s binding on the buyer. In other words, the buyer can’t withdraw the offer once it is presented to the sellers' agent or sellers. Past the irrevocable time, the buyer’s offer expires and becomes null and void, unless the parties agree otherwise. Of course the seller is under no obligation to respond to the buyer’s offer. For example if the sellers feel the offer is too low to even consider negotiating, they may choose not to deal with it. Of course the sellers can always make a counter offer
What if the Buyer’s Irrevocable is Too Short? At times the buyer’s irrevocable date is too short, as the buyer wants the sellers to make a quick decision in an effort to crowd out any additional potential offers. For example, the buyer signs an offer with an irrevocable of 6:00 pm that same day. The seller feels pressured by the little time given and so might choose to ignore it. If the seller works, by the time he gets home there is even less time to make a decision.
If a short irrevocable period to accept causes anxiety for the sellers, the likelihood that they will reject the offer is high.
What if the Sellers have a “Hot” Property? With a “hot” property that is getting lots of interest, the sellers may choose to wait and see whether competitive offers are forthcoming. Now all prospective buyers, including the initial buyer, are told that all offers will be reviewed by say 7:00 pm two days later. They will also be informed as to whether there are any and how many competing written offers will be presented. The initial buyer can change his irrevocable date to coincide with the time of presentation. Before presentation, buyers are also given the opportunity to improve their offers. If unwilling to compete, a buyer may choose to withdraw from the competition.
Good salespeople go to great lengths to explain the process. Yet buyers can become frustrated with the procedure. For example, Scott, a first-time buyer made an offer on a bank sale for $205,000, irrevocable for 48 hours. On Thursday and within the allotted time, the bank made a counter offer to Scott for $206,500, irrevocable until 6:00 pm Friday the following day. The buyer let the time lapse and then by Sunday decided to accept the seller’s counteroffer. Because the irrevocable time had expired, the bank was free to look at two other offers that had come in. As a result, the bank informed Scott that he had to submit a new offer to compete with the other two. Regardless, Scott felt he should get preferential treatment. He lost out and another offer was accepted at a price higher than $206,500.
Irrevocable dates, especially with hot properties need to be adhered to.