Seller's Attorney Delaying LOI

January 17, 2023

by a searcher in Dallas, TX, USA

I submitted an LOI mid-last week with a deadline of Saturday. A bit odd, yes, I'll admit. The broker comes back and says the seller's attorney needs until Monday or Tuesday. I respond with "thank you for the update, I look forward to hearing from you." It's now Tuesday and the broker is stating the attorney will hopefully have a response by the end of the week. By this point, the LOI has expired so I guess there's anything for me to do on my end. As the saying goes, time kills deals!

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Reply by an intermediary
from Wake Forest University in Winston-Salem, NC, USA

One other thought, and some misconstruing I see occasionally. The date at the end of an offer is not a deadline. It is an expiration. The genesis for this is in contract law and the timing and precedence of when offers are made and accepted. The buyer cannot compel a seller to respond by the date and time the buyer puts in their offer. What the expiration date does say is that I'm willing to proceed forward with this price and terms up until x time, unless I cancel it prior to x. If you accept prior to x (or cancelation), then we have a deal (albeit an LOI). After x, if the seller accepts, the buyer may or may not proceed as written or at all, and the buyer is not deemed to have reneged/retraded on their offer. This construct is to protect the buyer, so that if you make an offer that isn't accepted to by the expiration, that you can move on to another deal without having a prior offer still lingering (and being able to be accepted). Also note, that any counter, by either party is deemed a rejection of the offer at hand, thereby cancelling it.

Reply by an investor
from Western Washington University in Key West, FL 33040, USA

The expiration of an offer is pretty much meaningless anyway. It's just a negotiating tactic to try and add pressure to the seller and gauge their willingness to sell. The expiration of an initial offer is pretty much always ignored by the seller - whether you're buying a house or a business. They're going to counter and come back with a new deadline. If you want the deal bad enough, the seller knows they have time on their side. And it could be a test on their part to see how badly you want the deal and how hard they can negotiate with you. They may also be talking to someone else and trying to leverage your LOI to get an offer from another potential buyer. However, if things start out slow, it may also be a red flag that the whole deal will go slowly and you may want to reconsider if you want to move forward or not. So there's lots to consider here, but at the end of the day it comes down to how badly you want the deal.

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