Buying real estate can be an emotional rollercoaster, especially for 1st-time and inexperienced buyers. One major reason is that you’re asked to drastically switch gears during the process from patience to expeditiousness. It doesn’t seem on paper like a serious issue, but I assure you it can be both a physical and a mental challenge and more people are unprepared for this than they believe. Here’s why:
The Patient Tortoise
For most people finding the perfect home takes time. (To get an idea of how much time, read my colleague Michael Meltzer’s blog post here.) After initially viewing the existing product on the market, you’ll likely be set-up to receive new listings. The amount of listings you receive will depend how narrow your search criteria are, but regardless of that it’s safe to say you won’t be looking at homes every day of the week. This can sometimes put buyers into a ‘lull’ of sorts as there can be long periods with little action.
So months and months go by and then as if it were to drop out of the heavens *WHAM* you get hit with a new listing that hits the mark on ALL levels. It’s the perfect home on your favourite street, at a great price.
This is the time where your inner tortoise needs to be dropkicked by your inner hare, at least for the upcoming days.
The Expeditious Hare
Before an Agreement is Reached
As soon as a listing hits MLS it’s officially on the market for sale. With every minute that passes there’s always a risk that someone else will submit a successful offer. It’s not all that uncommon for a property to sell in a day or two. Even if there is a clear and defined offer presentation date, in today’s market you still have to assume there could be a bully (pre-emptive) offer. Demand is high and buyers are doing whatever it takes to secure a home.
The sooner you view the home the better. The early bird does often get the worm in today’s market. Even if the seller is not entertaining bully offers and has a set offer time specified, you may need time to coordinate professionals prior to offer night (home inspector, contractor, etc.) so that you don’t have to make your offer conditional on those things. Conditional offers are the kiss of death in a multiple offer situation.
During Negotiations
Once you submit an offer it’s important to note that it’s irrevocable for a defined period of time. If the seller does not accept or counter-offer in said time period, the offer becomes null and void. If the seller counters your offer with their own, they will set a new irrevocable time in which the buyer now only has a specified amount of time to accept or counter. This process is continued until an agreement is reached or negotiations die out.
The purpose of the irrevocable date is to allow the other side time to make an informed decision, but not leave them so much time as to allow them more time to explore other options. The shorter the irrevocable, the greater the pressure to make a decision. I’ve seen anywhere from a few hours to three days.
Regardless of the specifics, it’s not a lot of time. You have to coordinate with your Realtor to review the offer, possibly make changes, and initial and sign multiple pages before re-submitting. The bottom line is: if you really want the property then don’t disappear once an offer is submitted and keep in constant contact with your agent.
After an Agreement is Reached
Congrats, the seller accepted your offer! Sorry to say though that the deal is far from done. For starters, if you didn’t provide the seller with a deposit at time of acceptance you will have to do so in an expeditious manner immediately following acceptance. Sellers hate being left in limbo without a deposit so they usually require the deposit within one business day. It may seem like a short time, but ask yourself would you really want to pull your home off the market for days on end with only the promise of a deposit being received? Nope…so don’t expect them to.
Furthermore, if the agreement was conditional (home inspection, financing, etc.) you will have to complete your due diligence and sign the appropriate waivers in the specified amount of time. For example, a common condition on behalf of the buyer is a home inspection clause, which allows the buyer a specified amount of time to have an inspection completed by a professional. Times vary on the type of condition, but often you are left with only two to three business days. If you do not waive the condition in the specified amount of time, the deal can become voidable.
Ultimately, when home buying be prepared to harness both your inner tortoise and your inner hare. Many buyers are unsuccessful on their first attempt, so even after your period of expeditiousness you may be required to be patient again until the next dream home comes on the market. A good agent will help you manage this though, so don’t despair!