Let me give my recent experience, from about 6 weeks ago. My house was put on the MLS on a Sunday evening. We had insisted on a 24 hour notice for visits, so our agent scheduled something 8 for Tuesday, starting around 1 PM. We went over to a friend’s house since the agent didn’t want us around. She called us and told us an offer would be presented at 4:30 (call that #1). Then a second offer (#2) came in. She had previously gotten our consent to inform #1 that a second offer came in (although not what it was–she couldn’t know in any case). When she did that, #1 asked to revise their offer and changed their time to 5:00. So we came home before 5:00 and discovered there was a #3, which was presented immediately. It was a lowball offer and we didn’t seriously consider it. Then came the presentation of #4. The original offer was for our asking price! Their revised offer was $16,000 higher. I was ready to accept on the spot. But, and this relates to the OP, this was 5:30 and we had only till 7:00 to react. So only an hour and a half. So we signed out acceptance at 6:55 and our agent called the other agent who called the client. But note that all this was verbal and our acceptance was not binding until our agent had scanned our acceptance to the buyer’s agent. At 7:30, yet another agent appeared with #4, which was $$45,000 above our asking price! We could have reneged on the acceptance, but there were certain details that inclined us to stick to the original acceptance, which I won’t go into. All the offers came with less than 24 hours to respond.
I asked the agent if we should have asked more. She had originally wanted to list it for less, but her husband and partner convince her to go higher (the two of them spent 4 hours talking about the condition of the house and all hidden things we knew about–had there ever been a suicide in the house, for example). She said that a higher listing would have put us into a different demographic.
Bottom line: around here very short limits to respond seem to be perfectly normal. Of course, it we had responded with a counter-offer, we would have put a 24 hour limit on their reply.
There could be many reasons, such as needing to contact multiple members of a family; wanting to consult with legal or accounting assistance; desire not to be rushed for such an important decision, and of course hoping (or expecting) to receive another, better offer.
Yes and you have just put your finger on the main reason for the time limitation. It was obvious in our case that they didn’t want us to delay in hopes of a better offer. And they were right. That’s in a seller’s market. In a buyer’s market, they want to be free ASAP to make other offers.
Then one should either answer “No” or not put the property on the market until they are indeed ready to sell. In no case should a buyer offer be left hanging. The buyer puts a time limit on the offer not so much to put pressure on the seller but to protect themselves from being held hostage by an seller who can’t (or won’t) be arsed to respond. The seller can’t have their cake and eat it, too. Either reject the offer and hope for something higher or accept and move on. Minimum acceptable price should be discussed among and agreed to all owners before listing the property.
If your response refers to my quoted comment, consider that some properties are owned by several owners. Typically, the original owner dies and the property passes to the children, who may be scattered over the Earth. Getting sigs can be a nightmare, even with today’s electronic communications. And not all siblings instantly agree on the buyer’s price or terms. Negotiating this can take time and be quite frustrating to an agent and a buyer.
If I know the property is in a trust or has multiple owners, I caution the buyer to consider the extra time necessary to handle the logistics.
That may all be true- however, it still doesn’t mean the seller needs more than 24 hours to reply. More than 24 hours may be needed to accept , but I can see no reason why it can’t be rejected within 24 hours. It may mean the seller(s) reject the offer at 24 hours when it would have been accepted at 72 after all 5 siblings have conferred.If nearly all buyers want an answer within 24 hours , it may mean the sellers have difficulty selling it but it doesn’t mean they can’t reply within 24 hours.
And what is that about signatures - obviously , all of the owners have to sign various documents at some point, but in my experience , offers are made and accepted through the real estate agent and then within a couple of days a binder is signed. Although now I wonder if what you are calling the *offer *is what I am calling the binder. When I am talking about the decision being made within 24 hours, I am not talking about signing a binder or putting the down payment into escrow within 24 hours. I’m talking about the process of phone calls/texts/emails that communicates the buyer’s willingness to pay $X and communicates back whether the seller is willing to accept X.
I think the comment, is that all of the work you allude to should be worked out and agreed to prior to the property going on the market. All the negotiations internally with all of the children and ‘scattered’ owners should be done ahead of time and agreed to before the property is listed. all of the owners should be aware that if the place is listed an offer will possibly be forthcoming…if they aren’t aware of that possibility the place shouldn’t be on the market yet. I also think that a single point of contact can also be designated as the primary person to represent the family in this unusual case.
If the scenario you suggest occurs, that its probably not a big deal to require more that 24 hours. But it really is rude for a seller to try to sit on an offer for days and days ‘waiting for someone better’ to come along. If you aren’t ready to sell the house for a particular price when an offer comes in, than you should probably not be having it placed on the market yet.
If a seller doesn’t want to be rushed, why rush him? There’s nothing wrong with a seller wanting to see an additional offer or get better terms and is willing to take some chances to get one. Conversely, there’s nothing wrong with a buyer wanting to get a quick decision. It’s all part of negotiation.
YMMV, but in my state (Wisconsin), the term “binder” isn’t used, although we do say, “binding acceptance,” which only occurs when all parties have signed an agreement and delivered back to the buyer.[sup]*[/sup] Certainly there may be a verbal acceptance and negotiation, but no reputable agent would treat such as a written one. An agent, unless given a power of attorney, doesn’t have the authority to accept an offer on behalf of a seller or buyer, and would be foolish to do so.
Note: By itself, putting earnest money into an escrow account does not confer any privileges upon either buyer or seller and is not equivalent to a signed & delivered offer.
The exact wording on the WB-11 Residential Offer to Purchase, line 27, is
As much as you might like to “work things out before putting it on the market,” not all transactions are that clean. Things come up during the time it takes to close the transaction that were not anticipated in advance. Perhaps a flaw is discovered in the title or the foundation, financing, plumbing, or wiring. Whether major or minor, these things need to be addressed and the purchase contract will undoubtedly be modified or even cancelled.
I guess having the realtors pay it out of their commission has worked for me on the last two houses I have bought and sold. It depends on the selling price of the house and the resulting size of their respective commissions. Many realtors would be happy to part with $200-300 if that means that they are going to collect a $5,000-$10,000 commission much sooner than they thought otherwise.
There’s nothing wrong with a seller wanting to wait, but it can bite them in the ass. The last time I bought a house, I looked at a place a few days before their first open house. I put an offer in for full asking price. It was a definite sellers market at the time, but their house had some serious issues that I’d have to spend a bunch of money on so I thought that was fair. I put the offer in on Thursday morning, it expired Friday afternoon, the open house was Saturday. They didn’t reply at all. On Monday, they tried to accept the offer, so clearly the open house didn’t go as well as they hoped. I briefly considered just walking away, but wound up saying the original offer was off the table but placed a new offer for $2k less. They accepted it.
Well that’s just silly. Of course it’s reasonable to put a time limit on a bid but it’s not some moral failing for a seller to dither a bit about an offer.
Yeah, it seems that you and I mean something different by “offer”- in my experience the very short 24 hourish deadline is for a verbal decision whether to accept/reject/make a counteroffer. The written agreement that would be comparable to WB-11 Residential Offer to Purchase comes at least a couple of days later.
That seems like a recipe for disaster. IME the forms are all transmitted and signed electronically. Not sure why anyone would need a couple of days to take care of the paperwork.
Heh heh, I’ll skip the boring details but when we bought our house in 2002, we went through a rather similar situation, except we ended up getting the place for $50k less than our original offer. The seller was difficult to work with so I think it served her right that she ended up taking $50k less than she would have gotten if she’d just accepted our first offer and not dicked us around.
Speaking to the more general topic of accepting a buyer’s offer immediately, I’d be interested in knowledgeable commentary about this situation:
Right now, I’m sorta kinda house hunting but not in a position to move quickly (waiting for divorce settlement details to finalize; not sure if I’m keeping the house I’m in or ex will get it. I’m happy either way; whether or not ex wants it depends on the appraised value, which we haven’t received yet).
I saw my dream house for sale and looked up the MLS; it is listed as “contingent” and has been for at least 10 days or so now, maybe longer. The info available explicitly says that the sellers have an offer but are still taking other offers.
My assumption is that a couple of things might be going on. First, the current owners are trying to sell two adjacent properties, one with a house (that’s what I want) and a pasture next door. They would love it if someone would buy both together. I would imagine that selling the house alone is easier than selling the pasture alone and that they are disappointed but not surprised to have an offer on the house only.
Second, I suspect someone has made an offer and is waiting for the bank to approve the mortgage they want. So while the bank decides whether or not to give the loan to the prospective buyer, the seller is open to better offers, “better” most likely defined as “a reasonable price for the two properties together.”
Would be interested to hear if my theories make sense. In any case, I’m unlikely to get the property - regardless of what happens chances are it will be off the market before I’m in a position to make an offer. Oh well. I’ll just have to find a new dream home when the time comes.
There are a lot of common contingencies in real estate offers, including the buyer getting a loan (financing contingency) like you describe; the house “passing” inspection whether for defects, radon, lead, foundation, termites, water intrusion or what have you (inspection contingency); the house being worth enough to an independent third-party (appraisal contingency), or the buyer being able to sell his or her current home (home sale contingency). These types of contingencies generally allow the buyer to back out of the contract but not the seller. So, the seller can continue to field new offers from other buyers but, if all the buyer’s contingencies are resolved, the seller will have an enforceable contract to sell the property to the buyer. The seller can’t just decide to take a better offer that comes in later. The seller will accept one of those later offers only if the primary contract falls through.
If the house goes back on the market, it’s most likely because one of the contingencies didn’t occur. If it was an inspection or appraisal problem, the house is most likely going to drop in price after the failed contract to account for the new information. If it was a buyer problem, the price still might drop. The seller accepted the best available offer which probably meant the highest price. Since the buyer willing to pay the highest price has now dropped out of the market, the other potential buyers are probably making lower priced offers. Furthermore, if the seller was under some time pressure, that pressure is even more acute with the time lost on the first contract. The seller may be more willing to deal for a buyer who is better positioned to close quickly.
Not entirely true. Upon receipt of offer 2, seller can go back to Buyer 1 & ask them to lift the contingency or lose their bid. I’ve been Buyer 2 before. Buyer 1 either sold their house that day, or more than likely accepted the fact that they’d be on the hook for two mortgages for some period of time.
That WB-11 Residential Offer to Purchase apparently becomes a binding contract when it’s signed. In my area, it’s standard for the buyer, seller and the mortgage company or bank to each have their own lawyer, and I’m not signing a contract without my lawyer reviewing it. So let’s say I see the house Monday afternoon and call the agent /broker with an offer Monday evening. I might want an reply to my offer by Tuesday evening, but I am certainly not expecting a binding contract to be prepared and signed by Tuesday evening - and even if the sellers electronically sent me a signed contract Tuesday evening , there’s no way my lawyer is reviewing it Tuesday evening. ( Some states allow X days after signing before the contract becomes binding to allow for attorney review- as far as I know, any review in my state must occur before signing)
The binder I signed when I bought my house was not nearly as detailed as that WB 11 and was certainly not an actual binding contract. I believe it only remained in effect for a maximum of 10 days, long enough to draw up the contract , and arrange for attorney review and signing. That I think we signed the day after the offer was accepted.
An agent would be a fool to rely upon a verbal offer or acceptance. While it’s common for an agent to phone another to say, “we’re sending you an offer,” there is no legal agreement until the written offer is delivered.
The reason an agent might make that phone call is to verify that the property is still on the market. MLS data isn’t always up-to-the-minute accurate[sup]*[/sup], and no one wants to waste the time writing an offer that can’t be accepted.
Hard to believe, isn’t it? But there are actual, live people – some of which I have to deal with – that don’t have a computer or smartphone. If they aren’t physically close to our office, sometimes snail mail or Fedex is the best we can do.
Your guesses could be right. Just because the MLS lists “contingent” doesn’t mean the seller won’t look at another offer (see below), so have your agent contact the seller’s agent to find out if it matters to you. The seller’s agent cannot legally reveal the details of any pending offer except to say “some contingency exists,” but they will be able to tell you if a bump clause exists.
What you are talking about is the activation of a “bump clause,” not present in all contracts. Remember, the contract specifies what will happen under certain conditions. It’s entirely possible that a condition will trigger the cancellation of the contract or other conditions.
A Bump Clause allows a seller to conditionally accept an offer, with the buyer’s understanding that should a better one come by, the seller will give the buyer the option of removing the contingency and the contract will remain in effect.
This happens most often if the buyer needs to sell another property to pay for his new purchase. This means the seller could get hung up on this for years, but he doesn’t want to let the offer go until/unless another one comes along. He wants the best of both worlds, so to speak.
And some agents don’t enter the correct status of a property to the MLS even if pending, thinking this will discourage other potential buyers from contacting them if it is under contract. In our MLS, that status is deliberately hidden from the public (but not other agents) anyway, for this reason.
Contracts come in infinite varieties. You are correct that the parties could agree to such a term. As a buyer, I wouldn’t do so but I recognize that some people have.