Mar 18, 2019
Making an Offer on A House in NYC: When to Do it
You should make an offer on a house immediately and as early as possible to give yourself a maximum head start vs other potential bidders. The only exceptions are if there is an imminent open house or a best and final offer deadline which we’ll discuss in the following article.
Why Does Having a Head Start Matter?
Having a head start matters because there is a period of time between having an accepted offer and signing a contract where the buyer’s attorney must review and negotiate the contract plus conduct legal and financial due diligence.
Remember that real estate offers are not binding in NYC, so just because you have an accepted offer does not mean the seller is bound to do a deal with you. In fact, neither party is obligated to proceed with the deal until contracts are signed.
As a result, the seller could accept multiple offers and send contracts out to different buyers. Furthermore, because the seller is traditionally last to act, buyers are essentially legally bound once they sign the contract, but sellers are not bound until they counter-sign a contract.
This means a seller could even have multiple signed contracts sent to them by different buyers, and the seller could then choose to sign one, or perhaps negotiate further before agreeing to sign one.
So if you sense that a particular listing is priced to sell and that you might find yourself in a bidding war, it’s usually best to submit an offer as soon as possible to give yourself a maximum head start in the due diligence process vs any potential competitors.
Pro Tip: Learn just how much a good head start matters by reading our article on the time between offer and closing in NYC.
Should You Submit an Offer Before the Open House?
It depends on the competitive situation and how many days away the open house is. If it’s Saturday and the open house is tomorrow, then it won’t make sense typically to submit your offer before the open house. If you do so, the listing agent may not even get a chance to review it with their seller before the end of the weekend, plus the listing agent will have your offer as ammunition during the open house to goad other buyers to bid higher.
This is called shopping a buyer’s offer, and it is one of the most common tactics used by listing agents to induce a bidding war.
If however the open house is on Sunday and today is only Wednesday, then it may make sense to just submit your offer immediately. Find a real estate agent with plenty of experience who can do a fact finding call with the listing agent.
If the listing agent indicates the seller is eager to do a deal and has an attorney on standby who can get a contract out the same day, then the potential head start you would have vs any potential bidders who come in after the open house is significant.
The risk to such an approach is that the listing agent is late in sending around a deal sheet or the seller’s attorney is late in sending a draft purchase contract and contract rider to the buyer’s attorney. Despite the strongest of assurances by listing agents that if an offer is accepted a contract will go out the same day, delays often seem to just happen.
For example, see below for sample correspondence from a listing agent who had promised a deal sheet and a contract would be sent out the same day if an accepted offer was successfully negotiated:
We had the seller retain one of our top attorneys. Transaction sheet will go out shortly. Contract should go out first thing tomorrow.
Followed hours later by:
Was having issues with my computer then had to run to dinner. I’ll be at office early am and deal sheet will go out then. Attorney is ready to get a contract out tomorrow so this won’t delay us.
Pro Tip: Just what is the difference between a listing agent vs selling agent in NYC? Read our article to learn more, and make sure you find a real estate agent that will give you a discreet buyer closing credit at closing!
When to Make a Best and Final Offer
If the listing agent has announced a best and final offer deadline due to real or perceived demand, then it’s important to understand the nuances of when to make an offer on a house in NYC.
You shouldn’t wait to submit your offer until the last minute primarily because there is a real risk that you may forget to do so. Even if you set a delayed send time for your offer email, you still risk missing the deadline if the delayed message wasn’t set at the server level. For example, if you had set a delayed send for your offer email on Microsoft Outlook, that message might not actually send unless your computer is on and you are logged into Outlook.
However, you shouldn’t send your best and final offer too far in advance of the deadline either. That’s because you already know the seller won’t accept an offer and thus give a buyer a head start anyway ahead of the deadline.
So if you submit a strong offer early, there is a risk that an experienced real estate listing agent will actively shop your offer with other bidders. In fact, a really good listing agent will call each prospective buyer and tell them about your offer in an effort to induce a real bidding war.
As a result, we recommend having your buyer’s agent email your best and final offer approximately half an hour before the deadline. You should create a calendar invite to remind both you and your buyer’s agent to submit your offer one hour before the deadline. This gives your buyer’s agent ample heads up and time to get to a computer to send in your final offer.
Pro Tip: Did we answer your question on when to make an offer on a house in NYC? If not, please ask us anything by leaving a comment below or asking a question in our forum. We’d love to hear from you!
Read the Full Article: https://www.hauseit.com/when-to-make-an-offer-on-a-house-nyc/
Disclosure: Hauseit (https://www.hauseit.com) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. The services marketed on Hauseit.com are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).
