As the market continues to heat-up, acceptance of offers is beginning to be a problem. Oftentimes, sellers want to wait until the last minute to respond to an offer in hopes that a more attractive offer will be presented.
Recently a broker emailed me about an offer that was accepted well after the buyer’s offer had expired. He correctly opined that if acceptance of the offer comes after the expiration of the offer as set forth on the face of the contract, the buyer can deny the acceptance. Moreover, the buyer can rescind the offer prior to seller acceptance. Sellers holding offers comes at a risk.
On the buyer side, a broker recently suggested that perhaps his buyer agents could simply leave offer expiration dates blank to avoid their offers expiring while waiting to hear from the seller. We do not advise leaving the expirations of offers open-ended. First, the expiration of an offer tends to push the seller into making a decision. Leaving the date blank leaves your buyer in an uncertain state. Buyers typically simply want an answer so that they can move on if the seller is not interested.
Additionally, if the buyer decides to move on to another house and does not rescind the offer prior to entering the new contract, the buyer may find herself in two contracts. While they may be able to terminate one contract under the due diligence provision, it is risky because the buyer could inadvertently miss the deadline to terminate. Moreover, it could leave the buyer open to a possible claim of bad faith in dealing for entering into a contract with no intent to proceed.
Lastly, if there is no expiration date listed and the seller waits to accept the offer very close to the contract close date, the buyer may unable to complete due diligence or the loan process in the amount of time remaining after ratification, which could leave them facing a possible default.
Therefore, the buyer should always complete the expiration date and the real estate agent should advise the client on the benefits and risks of how long to give the seller to accept or counter.
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