Purchase Agreements, Deadlines, and (Other) Ultimatums
[Note to Readers: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced. If you need legal advice, please consult an attorney.]
At least in Minnesota, where I sell real estate, deadlines are incorporated into Purchase Agreements, Counter Offers, and other binding contracts much less than you might expect.
I think there are three reasons for that:
One. They’re unnecessary.
Until the other side accepts in writing, the other party may retract whatever it is they’ve proposed.
At any time.
So, just to pick a not-so-hypothetical, if the Seller is v-e-r-y slow to respond to the Buyer’s offer, the Buyer can simply withdraw it (and presumably, pursue another property).
Two. Deadlines can backfire.
What does an aggressive, savvy listing agent do when they get an offer that expires in 24 hours ” especially if it’s underwhelming? (besides recommend that the Seller counter it with stronger terms, that is).
Call every Buyer’s agent who’s expressed interest in the property, and tell them they have 23 hours to beat the offer/terms on the table.
Implicitly, the flip side of issuing a deadline is agreeing to wait the prescribed amount of time for a response.
Three. Risk of Alienating the Seller.
In light of reasons #1 and #2, veteran Minnesota Realtors seldom use formal deadlines.
Which is why, when you do see them, they can come across as heavy-handed, or worse.
The natural inclination for the party on the receiving end of an ultimatum is to get their back up.
In turn, that predictably widens, not narrows, the gap between the two parties . . .
P.S.: On the relatively rare occasion when a deadline is appropriate, it is imperative that the party issuing it, means it.
A Buyer who says they’ll walk if they Seller doesn’t reply by noon Tuesday risks losing all future credibility ” at least with that Seller ” if they come back to the table once the deadline has passed (extending the deadline = same difference).