How a deadline sale works

How it works

In a deadline sale, the agent lists the house with a date and time for offers, usually without a price. To make an offer, you fill out a sale and purchase agreement with your price and any conditions, and the agent gives it to the vendor. The agreement usually includes a deadline sale clause, which keeps your offer open until the deadline so the vendor can compare it with others.

After the deadline passes, the vendor can accept an offer, negotiate with one or more buyers, or turn them all down. If the listing says "unless sold prior" or doesn't mention early offers, the vendor can also accept an offer before the deadline.

A common technique is to bring the deadline forward on purpose. If an offer comes in that the vendor would accept, the agent sets an earlier deadline and calls everyone who has shown interest to let them know an offer is about to be accepted. Buyers then have only a few days to decide, so many rush to put in their best offer.

What the deadline is for

The agent's job is to get the best price for the vendor, and the deadline aims to get several buyers to put offers in writing at the same time. When there's more than one written offer, it becomes a multi-offer, and buyers who don't want to miss out often offer more than they would otherwise. This is one technique that real estate agents use to get the best price for their vendors.

How it worked when I sold

I sold a house by deadline sale, and it went exactly how the agent said it would. The deadline was five weeks after the listing went live. Less than two weeks in, when an offer came in that we would accept, the agent moved the deadline forward and called everyone who had shown interest. More offers came in, and the final price ended up considerably higher than the first offer.

You don't have to follow their timeline

The agent won't tell you this, but you don't have to get wrapped up in the deadline sale process. Say you're the only buyer who makes an offer. You might wait weeks for the deadline to pass before the vendor even looks at your offer, and they could still reject it or refuse to negotiate. All that time, you're left waiting on their timeline.

You can make an offer at any time unless the listing says the vendor won't sell before the deadline. Cross out the deadline sale clause, initial the change and write in your own expiry date. The agent has to pass every written offer to the vendor, so yours should be seen. The agent might not like it, because you're sidestepping the process they're running, but you're in control of your offer and its timing.

Making your own deadline

This works best if you can make a strong offer. If you're a cash buyer, you can make an unconditional offer with a short expiry to try to force the vendor's hand. Your price still needs to be fair. Early in the sale, the vendor's expectations are likely to be high, so a lowball probably won't get you anywhere.

The vendor then has to choose between taking guaranteed money now or waiting for a better offer by the deadline. They also know a cash buyer with an unconditional offer can move on to another house, so you might not wait around. If they accept, you get the house at the price you want. If not, you know where you stand and can look elsewhere. If you already know what the house is worth to you, this can get the deal done faster or rule the house out quickly.

An unconditional cash offer gives you a lot of leverage as a buyer, but it's not always possible. Keep your conditions to as few as you can while still protecting yourself. How few depends on your situation, your experience and how much risk you're comfortable with. Before you make an unconditional offer, make sure you're happy with the LIM report and the building inspection, or that you're willing to accept the risk of going without them.

Conditional or unconditional

You can make your offer conditional on things like finance, a LIM report or a building inspection. The vendor will compare your offer with any unconditional ones, and they might pick an unconditional offer even if it's for less money. When I sold my last house, we accepted a slightly lower offer because it was unconditional. We valued the certainty of being able to plan our next steps more than the extra money.

The more you sort out before making an offer, the fewer conditions you'll need. Get pre-approval from your lender early, and order the LIM and building inspection before you make your offer if you can.

When there are other offers

A multi-offer happens when the agent has more than one written offer. The agent should tell all buyers, ask everyone for their best offer, and explain that you can change or withdraw your offer until one is accepted. Ideally, avoid multi-offers altogether, because they push the price up.

If you do end up in one, stay level-headed and keep your emotions in check, so you make sound decisions. Work out what the house is worth on the market and what it's worth to you, then back yourself and stick to your guns. Many agents are genuinely nice people, but they work for the vendor, and they're salespeople who use various techniques to get you to spend more.

Working out your price

If there's no price listed, look at recent sales of similar homes nearby and decide your maximum price before making an offer. That way, a multi-offer won't push you past your limit. Use the mortgage repayment calculator to see what your repayments would be at that price.

Ask your lawyer to check the sale and purchase agreement before you give it to the agent.