Contract Deadlines, To Do or Not To Do?

Bottom line, Deadlines… I don’t like them, they can hurt you, but sometimes they are necessary.

If you have read my other posts on bidding wars and putting in offers to buy Virginia, MD or DC homes for sale, you know that I obsess with the art of negotiations. How you put in an offer matters. Want me to prove it? I can send you a 20 minute, non-public raw video I made of an analysis I did for a 7 contract bidding war. We were on the listing side. I compare and ridicule the 7 offers. You can then see how to make your contract stand out and see me yell (at the screen) for not-so-sharply written contracts and how that hurts the client. This shows you what not to do. It shows you a spreadsheet analysis and how to make your offer the best in each column… except maybe the price. I prefer my clients win with the lowest offer or at least not the highest offer. (this private link is only for people not currently working with an agent)

Back to deadlines. I don’t like them. Why? Experience. Seems logical to put in an offer and put a deadline of X days or X hours. Logic won’t win you a home for sale in Maryland in a seller’s market.

The problem with Deadlines

1. If you give somebody until Tuesday at 3:30pm, the tendency is for the home seller to wait until the entire time. A get out of jail free card, a cart blanch no stress, “we have until Tuesday at 3:30pm” to reply. The buyer sees that as the maximum time to reply. The seller sees it as the minimum time to reply.

2. During that deadline timeframe, they shop your offer. Lets say they were going to get back to you on Monday, but, you gave them an extra day to run up the price.

3. Weakness. A deadline can show weakness. When I get an offer that says to reply by X, they tend to be more desperate buyers. I use this sometimes to get my clients more money on the listing side. So on the buy side, sometimes playing it cool is better

4. Put a fast deadline? Sometimes, but pissing off the seller is also not helpful. So it is a fine balance.

On the Flipside, an example of when a Deadline WAS used.

Here is a client testimonial video where a deadline WAS used to beat out others in a bidding war, before the war could start. Amazing story if I may say so myself. The point? Every deal is different and will your aunt who might be a Realtor, do this for you?!

Tips with Deadlines if you decide to use them
1. Things always take longer then they logically should. So first ask the other side when they think they can review the contract. Then if they say tonight at 7pm, your deadline of 10pm or the next morning seems reasonable.

2. Avoid difficult times like 5pm. People work. Putting a deadline at the exact minute that people clock out… maybe not ideal.

3. Consider starting with no deadline and if things are slow, adding the deadline after the fact

4. Consider reminding the home seller that you have the right to withdraw the offer at any time. Even though this is technically the default, adding that makes it more clear that you might remove it if they wait too long. You remove the security blanket of having all the way up to the deadline with no risk.

What to do when we get a deadline, if you are the seller.

1. Remain calm! Too frequently a deadline will freak out a client. It adds stress.

2. If you are not accepting the contract, there is less of a need to counter within the deadline timeframe. A counter kills off the contract anyhow, so no need to rush to their timeline.

All of this stuff matters in winning bidding wars and ultimately trying to help a client get the best and lowest net on a home. When picking a Maryland, DC or Virginia Real Estate agent, sure you can get a “deal” elsewhere with a discount or rebate, but will your Rebate agent do this? If so… hire them.

These suggestions are general. There is no “So you never use them.” Each deal is unique. Strategy is of utmost importance. So sometimes yes, sometimes no.

If you are sick of losing deals or want to get off on the right foot from the beginning, please reach out to me about where you are looking to buy. Reach out early! As in 3-6 months before you THINK you might be interested in buying.

Thanks!

Frank LLosa Broker
Frankly Real Estate Inc (please report typos)

Blooper reel video on why NOT to use a Deadline in a Real Estate purchase.

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• April
• 2014

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