Dear home buyer: The truth behind offer deadlines

Ask the Expert Buying
A home for sale in Reading
Setting an offer review date tends to work well for properties in the sweet spot of a given market, experts said. Jon Gorey

You’ve probably seen the listing language: “Offers, if any, due Monday at 5 p.m.” It’s like seller’s market slang for, “Better brace yourself, buyers.”

What it means is that the seller plans to review any and all offers all at once, at a predetermined time, as opposed to looking at them individually as they come in. On the one hand, it’s helpful to know what kind of timeline you’re facing as a buyer and how quickly and aggressively you need to put together an offer if you’re interested.

On the other hand? That deadline may not even be real.

“Nothing grinds my gears more than the whole protocol around offer deadlines,” said Dana Bull, a realtor with Sagan Harborside Sotheby’s International Realty in Marblehead. Buyers need to realize that, deadline or not, a seller still has the right to reserve an offer at any time, Bull said. And they often do. “It doesn’t matter if there’s a deadline — as a seller, that is their right.”

Bull has seen buyers beaten out by what she calls “bully bids” — early offers with tight time constraints that aim to force a seller’s hand before a deadline. She considers it bad business for a seller not to stick to an advertised offer deadline. “But at the same time, you can do whatever it is that you want, you know? It’s your house, it’s your sale,” she said. “If you get a great offer that you can’t refuse, then you can’t refuse it.”

As a buyer in those situations, “You just don’t have a sense of control,” said Melony Swasey, leader of the Good Boston Living team in Jamaica Plain. “You don’t know whether a seller’s going to hold to that deadline or not.” But communication can help. “If [a buyer’s] agent doesn’t already have a relationship with that listing agent, if they begin by building rapport really quickly, having continuous conversations, they’re going to have some idea if that listing agent has another offer that’s circling around them ahead of the deadline,” Swasey said.

Generally, it’s in a seller’s best interest to stick to a deadline if they’ve set one, Bull and other agents agreed, since you want as many potential buyers as possible to see the property, and reviewing multiple offers at once means you’ll likely have backup options if the first falls through. But an early, enticing offer presents a “bird in the hand” scenario for sellers.

“When you have an offer in front of you and it looks really good, it can be very tempting,” Bull said. “What I tell my sellers is: ‘There’s no guarantee that these buyers are still going to be here on Monday for our deadline. But there’s a pretty good chance, if they love it this much, that they’re going to come back.’”

Setting an offer review date tends to work well for properties in the sweet spot of a given market, Bull said, where the price point and cosmetics line up with popular demand. “If we know that we’re going to get a lot of activity, because we’re pricing it well and because this is what the people want, that’s where offer deadlines tend to be most successful,” she said.

For sellers with a more niche home, though, an offer deadline can be riskier. “If you have this super high-end luxury home, where the buyer pool is really small because it’s at a price point that most people can’t afford, or if you have a unique property, you need to be careful with setting the expectation that it’s going to be competitive,” Bull said. “Because it may not be, and people are watching that. If you see there’s an offer deadline on Monday, and then the house is still on the market on Wednesday, that sends a message: We know that those sellers didn’t get what they wanted.”

Every listing has its own nuances, Swasey said, but setting an offer deadline after a weekend of open houses “can help organize and mobilize interested buyers,” she said, alerting them that, if they like the home, this is the weekend to move aggressively on it. But offer review dates can backfire on an overpriced property, she said, or during a seasonal lull in demand, such as late summer or December, when buyers may not be ready to act so decisively.

Marina Belyea, a realtor with Compass in Lexington, agreed that it’s usually in a seller’s best interest to hold out for a deadline if they’ve set one, “especially in this market with such low inventory.” She recently listed a home with an offer review deadline and received some two dozen offers, which allowed the seller to compare them all at once. “We did get a very attractive early offer — however, in the end, by holding to the deadline, the seller benefited tremendously.”

Deadline or not, it’s just extremely challenging to be on the other side — a buyer in a seller’s market. “Some sellers do accept offers before the deadline, which is frustrating,” Belyea said. Meanwhile, if they do hold to their deadline, “you need to be aggressive to win — and unless you have a buyer that is willing to waive contingencies, it usually leads to disappointment.”

When Bull’s buyers are interested in a listing with an offer deadline, she tries to get them in for a showing immediately, before the weekend’s open houses, so they have time to maneuver if they like the place. “Go to the open houses, see how much activity there is, listen in on what people are saying,” she suggested. That also leaves a couple of days to conduct a pre-inspection (with the listing agent’s approval), so they can feel more comfortable waiving their inspection contingency, or to do any other due diligence, such as scoping out the neighborhood or researching permits.

Like Swasey, Bull said communication is crucial. “For a lot of these situations, I know we’re negotiating from a position of weakness; I know that property’s going to be competitive. So it’s about making sure that my clients don’t slip through the cracks,” Bull said. That means following up after a tour and checking in to see whether anything has changed with the deadline.

“I always ask the question, ‘If I know my clients love the house, would you entertain an offer before the deadline?’ Sometimes they say, ‘Absolutely not,’ or sometimes they say, ‘Well, you know…’ and you kind of read the situation. But it’s really about keeping those lines of communication open.”

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