Dear Monty column: Deadlines on home sale documents critical
Columns share an author’s personal perspective.
Reader Question: What time limit to respond is best on my offer as a buyer?
Monty's Answer: An offer to purchase calls for a deadline for the seller to act. If the seller does not act before the deadline, the offer expires.
It is wise to get agreement from the seller before inserting an arbitrary acceptance deadline or one you feel may be to your advantage. One of the common concerns a homebuyer may experience is another buyer lurking. Will the seller try to start a bidding war? If you chose 12 hours and the seller is fishing in Canada, it may be a waste of time. It is not uncommon for an agent to allude to another buyer to influence your offering price and timing. Most often, such fears are unfounded. The local practice can vary, but 24 to 48 hours for an initial offer is typical.
There are many deadlines in real estate contracts. Some are more important than others. Here is a list of deadlines you will encounter in almost every deal.
1. Deposit: Earnest money has various delivery requirements. With the offer, within a few days, upon acceptance, which varies with circumstances and amounts.
2. Financing: Financing is used in over sixty percent of home purchases. Between the loan, the appraisal, and the inspection, this is the most volatile time. Plan carefully to avoid missing a deadline here.
3. Title evidence: This requirement in every sale is paramount. Title searchers work for title companies and review recorded documents associated with the property. It is not uncommon to find a break in the chain of title that must be corrected. To have a delivery date two days before the closing may not provide enough time to satisfy the defect.
4. Seller condition report: In my home state, the statutes require the seller to furnish the buyer the completed report within ten days of acceptance, or the buyer may void the transaction.
5. Offer acceptance: Usually within 24-48 hours.
6. Surveys: Making sure you know the location of your property lines. A survey requires a deadline. Some are a piece of cake; others can be nightmares. If you can locate a surveyor who has completed much work in the immediate area, it may be faster and less expensive.
7. Closing date: Miss the closing when time is of the essence, and the transaction is likely dead if one of the parties is looking for an out.
Establish a timeline
When drafting an offer to purchase, it is wise to have a calendar handy to help determine deadline dates. For example, you will likely not be able to close on a Sunday. Does the contract define days where the agreement excludes weekends and holidays in the definition of a day? For some of these specialized services, it may be helpful to check with the vendor first. Finally, when you begin looking at homes, start asking everyone you know whom they used for the different vendors. Vet your vendors early in the process and be cautious with agent referrals. Lay the plan out before you agree to a closing date.
Richard Montgomery is the author of “House Money - An Insider’s Secrets to Saving Thousands When You Buy or Sell a Home.” He is a real estate industry veteran who advocates industry reform and offers readers unbiased real estate advice. Find him at DearMonty.com.