When you submit an offer on a property, it’s really not a complicated document. Consider how much money you’re investing, it’s only about 7-8 pages for most residential properties.
Included in your offer are things like price, deposit amount, conditions, the closing date when you take possession, inclusions and exclusions, other clauses like being able to book a revisit and that everything will be in good working order.
There’s one more part of the offer called an irrevocable period, which is how long your offer is open for acceptance.
As a buyer, you have the option of giving a LONG irrevocable time, perhaps so the seller can think about your offer. This can work well in commercial real estate and rural properties… because those markets tend to move more slowly. And you know that there’s likely NOT going to be someone else interested.
On the other hand, if you’re worried other buyers will be interested in the home, putting a SHORT irrevocable time puts the squeeze on the seller to accept your offer quickly… especially if you’ve put your best foot forward and it’s a strong offer. Putting a weak offer with a short irrevocable time period might mean you don’t get ANY response.
Listing agents (who are representing the seller) will often ask for a 24-hour or 48-hour irrevocable time on offers.
Sometimes the reasons can be valid, like an estate where there are multiple decision makers, or dealing with a bank or lender where they often have bureaucratic delays.
But there are other silly excuses like the seller being out-of-town. We’ve had clients across the world with 10-18 hours time difference, and we’ve still always been able to get an answer from them in less than 24 hours.
The best is when the listing agent says the sellers are out-of-town, but you drive past the home at 8:00 PM and they’re making dinner in the kitchen. That’s happened more times than we care to mention.
But that’s the cat-and-mouse game of negotiations. Don’t hate the players.
Here’s the main point of this post…
Why is a long irrevocable period a BAD idea for the buyer?
Because once you submit your offer, the listing agent will do everything they can to try to find ANOTHER buyer during the irrevocable time.
The terms of your offer will not be disclosed to other parties – that’s against the rules. But the fact that your offer exists, and it’s open for acceptance for 1-2 days, allows the sellers to dig in with any interested parties to see if they would be interested in trying an offer before they lose out.
You are at the mercy of YOUR OWN offer for as long as the irrevocable period lasts!
You can’t really make an offer on another property, because what if both of them get accepted?
You open up risk by giving other buyers a shot at making an offer, and you give the sellers leverage.
So you end up being stuck.
The bottom line? No matter what the listing agent wants or needs, be sure to put an irrevocable time that YOU feel comfortable with. In the age of digital signing, getting answers shouldn’t take two full days. Although in certain situations, it’s unavoidable… work with your agent to understand when it’s a legitimate time to leave a longer irrevocable, and when it’s time to squeeze for a quick answer.