Content of the material
- What Happens After I Submit an Offer?
- Accept Your Offer
- Counter Your Offer
- Let the Offer Expire
- The Bottom Line: The Right House Will Come When The Time Is Right
- The Outbid Offer
- How To Increase Your Chances
- What the offer process looks like
- Does a seller even have to respond?
- Some Exceptions to the Usual Rules
- How Long Do They Have To Respond?
- Should you put an expiration date on your offer?
- Reasons Offers Are Withheld
- Should you add an escalation clause to your offer?
- What’s the timeline of the offer to closing?
What Happens After I Submit an Offer?
Submitting an offer on a home can feel like a first date — will they call? Will you get a second date? Will you get ghosted? After you submit your offer, the seller can either accept the offer as is, counter your offer, or simply not respond. Here’s a breakdown of how each of these options works.
Accept Your Offer
If your offer is a good one — meaning at or above asking price, with quick closing, and no contingencies — and it’s a buyer’s market, the seller may simply accept your offer as is prior to the specified deadline. This is the easiest scenario and then you can move on to the next step, requesting a home inspection and negotiating repairs.
Counter Your Offer
When it’s a seller’s market and/or the seller doesn’t like something in your offer, they may counter your offer with a change in price or terms. They may ask for more money, an earlier closing date, or removal of a home sale contingency — a relatively common stipulation you must sell your own home in order to be tied to the contract.
If a seller submits a counteroffer, the clock starts over and now you have 72 hours or whatever amount of time is noted in the counteroffer to accept, or re-counter. The better your initial offer, the less back-and-forth there will be, and the greater chance you’ll have at beating out other potential buyers.
Let the Offer Expire
The seller may simply let the deadline for their response pass by without contacting you at all. In this case, it signals that your offer was way off the mark in the eyes of the seller. Either you submitted a lowball offer or your terms and contingencies were too many — either way, the seller doesn’t want to waste their time even responding because they don’t think you’ll ever be able to come to a consensus.
Another possibility, especially in a seller’s market, is that the seller received so many other, better offers that they’re spending their time negotiating with the top offers, rather than sending you a rejection letter. If a seller doesn’t respond in the designated timeframe, the offer is voided and neither party is tied to anything legally.
The Bottom Line: The Right House Will Come When The Time Is Right
If you made an offer on a house with no response, don’t give up. It may not be the right house for you, or it may just take time to get all the details worked out. The home buying search can be stressful, overwhelming and fun all simultaneously, but eventually, the house that was meant to be will come along.
The Outbid Offer
Sometimes, sellers want to wait a bit to see whether a better offer will come in. A seller might ask the buyer for more time to accept the offer in this case, or they might try to receive and decide upon another offer before the existing purchase offer has expired.
A seller whose home has been on the market for 60 days or more might want to concentrate on the offer at hand, however, especially if it’s a good one. This can avoid missing a prime opportunity because homes typically become more difficult to sell the longer they’re on the market.
How To Increase Your Chances
The key to having your offer accepted quickly is to know the market and what the home is worth. You don’t want to overpay, but you want to make sure your offer is more attractive than offers from other potential buyers. There’s a fine balance.
As a general rule, the less contingencies and the more bland the contract, the better — especially in a seller’s market when there are multiple offers to choose from. For example, a traditional loan may be more attractive to a seller than an FHA loan since the latter is known for having stricter rules related to repairs the seller must make in order for the buyer’s loan to go through. If the buyer’s loan doesn’t get through, the sale doesn’t go through.
Also, the more of a down payment you can make, the better. This also has to do with your mortgage getting approved. If you make a small down payment (some FHA loans require as little as 3.5%), and your lender’s appraisal comes in way under the agreed upon purchase price, your lender likely won’t approve the loan because it’s too risky — you’ve got too little of equity in the home from the start. Again, no loan, no sale.
What the offer process looks like
You did it. You made your offer. Let’s say the seller doesn’t reject it — what happens next? There are two potential outcomes: They accept your offer, or they counter your offer.
The best-case scenario is that they accept your offer, and then you quickly move onto the home inspection stage.
If they counter your offer (which is more common in a seller’s market), the seller may come back to you with a proposed price or terms change. Maybe your offer price was too low or they want to agree to an earlier closing date. The reasons sellers have for countering depend on their unique needs and preferences.
If the seller submits a counteroffer, you typically have around 72 hours to respond, but the seller will note the exact amount of time you have to respond in their official counteroffer. The seller may only give you a chance to accept or deny the offer, or they may allow you to re-counter.
Unfortunately, you may not hear back at all after you submit an offer to a seller. This may be because they had many other (and perhaps better) offers to consider, or because your offer was so low they didn’t think that a counteroffer would be worth their time. If the seller doesn’t respond to your offer in the designated time frame, your offer becomes void.
Keep in mind, Orchard can help you make a more competitive, all-cash offer, which is less likely to lose.
Does a seller even have to respond?
Although it may seem like a bad way to do business, the fact is that a seller doesn’t have to respond to an offer. The seller or the seller’s listing agent may “acknowledge” receipt of your offer, but that’s not the same thing as responding to it.
There are several reasons why a seller may not respond, at least as quickly as you’d like:
- Offer is unreasonable or not in the seller’s best interests
For example, if the offer is low with a price significantly below the asking price, the seller may think that the buyer simply isn’t credible.
Other reasons an offer may lack credibility include little or no earnest money, countless seller concession requests, or unusual contingencies such as a long amount of time to close escrow.
- Seller wants to review all offers at once
Sometimes, a seller delays responding in order to show the property to more buyers, then compare the multiple offers side-by-side.
For the seller, the potential upside is that more offers may come in. In the meantime, however, other qualified buyers hoping for a quick replay may simply withdraw their offers.
- Waiting until the first open house is held
The seller’s agent may advise the seller to hold off on reviewing offers until the first open house is held. That’s because marketing the property to the general public by using an open house can sometimes generate high-priced offers, especially if there is more demand than supply in the market.
Some Exceptions to the Usual Rules
The timeframe is likely to be longer when a bank is selling a property. This could be the case with a short sale or due to foreclosure. Anticipate a minimum of two days in a foreclosure situation, and a month or more for a short sale.
How Long Do They Have To Respond?
Legally speaking, there isn’t a time frame sellers must respond to your offer. However, it’s an unspoken rule in the industry that sellers and/or the listing agents should respond within a few days, with 48 hours the norm.
In certain states, an offer is considered revoked, and you are no longer legally bound to it after a certain number of days.
For example, in California, the contract is considered null and void at 5:00 p.m. on the third day after the buyer signs it if the seller hasn’t responded. The rules aren’t as clear in Texas, but most buyers can consider the offer null and void after 2 – 4 days, according to the Texas State Affordable Housing Corporation.
Should you put an expiration date on your offer?
You do have the option of adding an expiration date to your written offer. In that case, if you don’t hear back from the seller by the deadline you set, the offer dies automatically. When the offer expires, you’re free and clear to go ahead and bid on another house.
However, you should chat with your agent about whether this is the best move from a strategic perspective.
According to O’Brien, buyers are better off simply withdrawing their offer on the first property if the seller hasn’t responded before making an offer on another home. You never know, your request to withdraw may be just the nudge the seller needs to accept your original offer.
“I don’t usually advise buyers to put an expiration date on their offer because they can pull it at any time,” she says.
Reasons Offers Are Withheld
A broker acting in good faith and in accordance with ethical standards shows all legitimate offers. He might, however, withhold offers that fall short of the seller’s minimum requirements if instructed by the seller to do so. If acting in bad faith, a broker might withhold offers for his personal benefit, such as improving his chances of finding and representing a buyer of his own as a dual agent — which usually means more commission. In such a case, a seller may have legal recourse for breach of duty, as brokers have a fiduciary duty to act in the client’s best interests.
Should you add an escalation clause to your offer?
Buyers who know they’re facing a bidding war scenario may be tempted to put an escalation clause into their offer in order to speed the process along.
An escalation is an addendum to your offer contract that sets escalation conditions and a sales price cap. The clause automatically increases your offer amount up to a predetermined limit should the seller get a better offer from another buyer.
The clause eliminates the need for the constant back-and-forth between the seller and multiple buyers, and the risk that they might accept another offer because they couldn’t get a hold of you in time.
Escalation clauses are pretty common in hot seller’s markets where bidding wars are common and homes sell in a matter of days or even hours.
However, adding an escalation clause to your offer isn’t always the smart move for buyers — because you’re basically showing the seller your cards, then bidding as if they don’t know what you’re holding.
The escalation clause works as an advantage for the seller for two reasons:
- It tells the seller that you are willing to pay more — which means they may hold out longer waiting for another offer simply to drive up your bid.
- If they get an offer from another buyer that’s over your escalation clause price cap, they may simply assume you can’t afford to outbid the other buyer, and may not offer you the chance to match or beat the other bid.
As you can see, instead of speeding up the offer acceptance timeframe as intended, an escalation clause risks lengthening your wait time as the seller delays or ignores your offer.
What’s the timeline of the offer to closing?
Typically, closing on a house takes about 30 to 45 days, so if you add on a week or two for the seller to consider an offer and to work through any counter offer negotiations, it can take around two months to complete the offer to closing process.
Keep in mind: The negotiation process doesn’t stop once the seller accepts the offer. Even once you sign a purchase offer that agrees to a certain price and terms, there is still room for negotiation. This is because you’ll begin the inspection and home appraisal process which may bring attention to issues with the home.
The process of buying a home often takes longer than we’d like, so be patient and know that it will all work out.