Offer review date - what you need to know.
In a strong home sellers market like Seattle, where the inventory is low and there are too many buyers competing for too few homes, the majority of homes that are listed for sale will set an offer review deadline.
In real estate, the offer review date is the day and time that the seller has selected to review any and all buyer offers that are submitted on their home. Interested buyers must submit their offer by the stated deadline. However, the seller still retains the right to accept an early offer and is not obligated to honor the offer review date.
It is important for both home buyers and when selling your home to understand precisely what an offer review date means and the pros and cons of the seller setting one.
The two main ways home sellers decide to review offers.
Listing practices will vary around the country, but in the Seattle area at least, when a home is listed for sale and the listing information is uploaded into the Multiple Listing Service (MLS) by their agent, the sellers can check one of two boxes:
- The seller will review offers upon receipt.
- The seller will review offers on Offer Review Date (may review/accept sooner).
Listings That Review offers Upon Receipt.
When the sellers tag their listing with the seller will review offers upon receipt, the implication is that they will accept the first good offer that meets their expectations.
In a competitive market, when the seller does not set an offer review date, it usually means that they are not expecting multiple offers on the home. That could be for a number of reasons including the fact that they know they are pushing the price (despite their own agent's advice) or the home has some aspects that might reduce buyer appeal like a noisy location or the home has an odd layout
For homes with no offer review deadlines, an interested buyer can jump in and make an offer whenever they want. If it's the only offer and one that the seller likes, then the seller is likely to accept the offer
However, buyers should be aware that if the home unexpectedly starts getting a lot of interest and early offers, the seller might turn around and decide to set an offer review deadline after all to increase competition for the home and to try and drive up the sales price. And that usually gets buyers riled up and feeling manipulated.
Even if the seller hasn't set an offer review deadline, as soon they get that one offer, the listing agent might start calling all the other agents who have shown the home previously to try and leverage the offer for a better one. Don't take it personally, the listing agent is just doing their job trying to get as much as possible for the seller.
Homes listed with an offer review date.
In Seattle's seller's market, about 9 out of 10 listings that come on the market will set an offer review deadline. The home will usually come on the market in the middle of the week and the offer review deadline will be set for the following Tuesday or Wednesday, sometimes sooner.
The idea behind this timeline is to give buyers and their agents enough time to see the home and decide if they want to make an offer. For a properly priced home, setting an offer deadline usually results in increased competition for the home and a higher number of offers. This then forces buyers into deciding which contingencies they are willing to waive in order to win the bidding war.
Also, by allowing a set period of time between coming on the market and reviewing offers, the seller is hoping that the most interested buyers will do a pre-inspection of the home, waive the inspection contingency in their offer and buy the home as-is. Sellers love offers without an inspection addendum because the buyer is giving up their number one way of getting out of the sale and walking with their earnest money.
In competitive real estate markets, things can get a little irrational and desperate buyers will start making riskier and risker offers to win the home. Know your limits and when to step back and just wait for the next batch of new listings.
The pros and cons of setting an offer review date - from the seller's perspective.
The advantages of an offer review deadline:
- Setting a review date usually generates increased buyer competition for the home, resulting in more offers while driving the sales price up.
- Generates offers with fewer contingencies, aka cleaner offers. Some buyers will pre-inspect the home and waive the inspection contingency while others will go a step further either by partially or fully waiving the appraisal and other contingencies.
- The seller gets to control the period of time between when the home goes on the market and when offers will be reviews and then focus on packing, moving, and getting ready to close.
- The seller retains the right to accept an early offer and does not have to honor the offer review date. Note that some listing will expressly state: the seller will honor the offer review date. In those situations, the seller usually does abide by that promise because karma is a...
- If a motivated buyer tries to make an early offer they know that it will have to be a really strong one with less than the full complement of contingencies. The offer will probably be a lot stronger than the equivalent one submitted for the offers will be reviewed upon receipt option.
Some potential disadvantages of using an offer review date:
- Just because a seller sets a day and time to review offers, it does not mean that the listing is guaranteed to get multiple offers or even one offer. Even in a hot market, the home still has to be priced and marketed properly. Buyers are very savvy these days and are armed with apps and statistics and recognize over-priced homes and lemons when they walk into one.
- Buyers who have missed out on a couple of homes after paying for a pre-inspection to improve their offers will quickly tire of offer deadlines and may decide to just sit this one out. And those buyers might have made really good offers.
- If there are other nearby listings that have set the same day to review offers, then buyers will be forced to decide as to which home to make an offer on, probably resulting in fewer offers on each home.
- Some buyers may not be willing to wait until the offer date and the inevitable bidding frenzy and just decide to go after a home with no offer review date. However, in a strong seller's market, nearly all listings will have offer review dates.
- If the seller accepts an early too-good-to-say-no-to-offer, they will be risking the ire of a lot of other buyers and their agents. The listing agent will be making a lot of humble pie phone calls. At a minimum, the listing agent should contact all the Realtors who have shown the home already to notify them that the seller is considering accepting an early offer and give those buyers a chance to submit a quick offer. Again, however, the seller is under no obligation to do this. But they should because they might get an even better offer.
- Experienced agents and their buyers will usually wait until the last couple of hours before the deadline to submit their offers. The buyer's agent wants to try and get as much information as possible on the competition before submitting their offer. So basically, the listing agent and their seller might have to deal with a tsunami of offers just before the deadline expires. But that's more of an inconvenience rather than a disadvantage.
To summarize in regards to Offer Review Dates- What you Need to Know: there are both pros and cons to using this strategy when selling a home. In a hot seller's market, it does tend to generate higher and better offers by increasing buyer competition. However, just because you set an offer deadline does not guarantee that you will get lots of offers or any offers for that matter. You still have to market your home properly, and that includes getting the listing price right.
Here are some additional resources that home sellers will find useful:
Myths That Should Be Ignored When Selling Your Home from Kevin Vitali.
Things you SHOULDN'T Do When Selling Your Home from Luke Skar.
Who Pays the Realtor? from Joe Boylan
Tips For Selling Your Home Faster from Danny Margagliano.
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