If there are a lot of people interested in a property you’re thinking of buying, you might want to consider including an expiration date in your offer. An expiration date forces a seller to make a quick decision on your offer so they don’t have time to “shop it” around to other buyers.
A listing agent’s job is to procure the highest and best offer possible for their client. It’s important for a buyer agent to council their client on the best strategies to counter the listing agent’s and seller’s goals.
In most situations, sellers and their listing agents respond in a timely fashion to offers, but in a very active seller’s market where multiple offers are very common, good listing agents will use these offers to generate a bidding war among buyers. If there has been a lot of interest around a listing but no offers yet, a good listing agent will also use the first offer that comes in as a tool to help generate offers from other interested buyers that have been "on the fence," so to speak.
When an expiration date is included in an offer, the offer becomes void after that date if the seller has not yet responded to the offer. Here are a couple situations where using an expiration date can be advantageous:
- You’re a buyer who is making an offer on a property and the seller has already received multiple offers. Perhaps you’re planning on going in with what you think will be the best offer and you want to limit the time the seller has to use your offer to create a bidding war among the other buyers.
- You’re a buyer who is making the first offer on a property. Just because you’re the first offer doesn’t mean there aren’t other interested parties. You want to give the seller a short, but reasonable time to respond to your offer.
An expiration date is just one example of many different strategies that can be used in real estate contracts. In any real estate transaction, your goal should be to get the best deal possible. You should expect your agent to advise you on all of the different tools at your disposal in order to ensure that you don’t leave money on the table.