Read Time: 3-4 minutes
Introduction:
In this newsletter, we’ll explore a powerful strategy for first home homebuyers: using a deadline when making an offer on a property. We’ll discuss how this tactic can give you leverage when negotiating with sellers and why it’s especially useful in today’s market.
What this newsletter will cover:
The advantages of setting a deadline for your property offer, the mechanics behind it, and how it can help first home buyers gain some control in a competitive market.
What this newsletter will not cover:
We won’t dive into broader negotiation strategies, but instead focus on how deadlines can shift power in your favour during the offer process.
PROBLEM: First home Buyers Often Feel Powerless in Negotiations
- First home homebuyers often feel like they have no leverage when competing against other buyers or negotiating with sellers.
- Agents frequently push buyers into a sense of urgency, using tactics like claiming there are "other offers" to drive competition between buyers.
- The pressure often leads to rushed decisions and inflated offers, especially when buyers feel they are in a multi-offer situation.
RISK: Not Setting a Deadline Leaves You at the Seller’s Mercy
- Without a deadline, sellers hold all the power to prolong negotiations, waiting for better offers to come in.
- This lack of control can leave buyers feeling frustrated and helpless, as they may lose out to another buyer or be pressured into increasing their offer.
- The absence of a clear decision timeline creates an uneven playing field, favoring the seller and the agent.
CONTEXT: Why First Home Buyers Struggle in a Competitive Market
- Agents often create a sense of urgency by claiming that another offer is on the way, which may or may not be true. A verbal offer is not legally binding, and agents must present buyers with a multi-offer form for transparency when there is actually another signed offer on the table.
- These tactics are designed to create a bidding war between buyers, which drives up the final sale price.
- However, with the market having slowed over the last two years, immediate multi-offer situations are less common than they appear.
SOLUTION: How Setting a Deadline Can Give You the Upper Hand
- Set a Deadline for Your Offer:
1) We recommend setting the deadline for 4 p.m. on Friday of the same week you submit the offer.2) This gives the seller enough time to consider your offer but limits their ability to wait for other potential buyers. - Create Urgency for the Seller:
By placing a deadline on your offer, you create urgency for the seller. If they don’t accept by the deadline, they risk losing a serious buyer and may have to wait longer for another offer. - Avoid Competing Offers:
1) Since most open homes happen on Saturdays and Sundays, setting a deadline before the weekend ensures fewer new buyers will come forward with competing offers.
2) This puts pressure on the seller to accept your offer sooner, rather than risk waiting for another. - Terminate Automatically if Not Accepted:
The beauty of this strategy is that if the seller doesn’t accept your offer by the deadline, the contract is automatically terminated. You’re not left hanging, and you can move on to the next property with your options open. - Example- Deadline Clause:
Deadline Further Terms
This offer by the purchaser is open for acceptance by the vendor by [insert date]. If by that time, the vendor has not accepted the offer by signing this agreement and giving written notice of such acceptance to the purchaser or the purchaser’s lawyer then this offer will lapse and have no further legal effect and neither party will have any claim against each other.
TL; DR:
- Set a deadline for your offer (ideally 4 p.m. on Friday).
- Create urgency for the seller to make a decision.
- Avoid competition by submitting your offer early in the week before new buyers appear.
- Protect yourself with an automatic termination clause if the seller doesn’t accept by the deadline.
- Be aware that using this tactic will make the agent less cooperative.
