You do, even if you don’t.
The dictum Time is of the essence is a legal principle. It applies to the many steps of a real estate transaction from mutual agreement to closing. Especially these days when many buyers are chasing a few properties, time and timing are critical factors.
The offer begins with the offer date. The next date is the required response date for the seller, called the offer expiration date. Sellers are not obligated to respond and if a seller does not respond, the offer expires. Is it good to push the seller for a quick reply? Yes, if the offer is stellar in every respect and impossible for the seller to refuse. Note that in a sellers’ market many sellers expect more than one offer. Then, the listings may state that the seller will review offers at a certain date.
The next date of an offer is the closing date. It’s good to determine in advance if a quick close is important to the seller. A quick closing date can strengthen an offer. If a fast closing matters to the seller, a cash buyer has the edge.
The clock starts ticking when seller and buyer agree, including the terms of the offer. Those terms, also called contingencies, usually include inspection and financing. These and other terms spell out the dates by which one or the other party must act. The usual time frame for the buyer to respond to the seller regarding the inspection results is ten days.
Missed the deadline? Moving on!
If a buyer does not respond by the deadline of the inspection contingency, the parties move on. The consequence of doing nothing can be costly. If the buyer meant to ask the seller to perform repairs for items found defective in the inspection, too bad. Worse, if the buyer wanted to cancel the transaction because of the inspection results, that opportunity is gone. Time is of the essence.
Sometimes, the buyer or seller anticipate needing more time to meet a deadline spelled out in the contract. Then, one party sends the other an addendum requesting an extension. If the other party does not agree and the asking party does not perform they may be violating the terms of the contract. This would be especially critical when the deadline in question is the closing date. The seller could deny the extension of the closing extension and retain the buyer’s earnest money after the contract expires.
When five days are more than six.
The clock starts ticking the day after the event. If the mutual agreement is reached on June 2nd, day one of the number of days allowed for whatever contingency is June 3rd. There is an interesting twist to counting time that is stated in the contract. A period of five days can be the same as a period of seven days. That’s because five days or fewer excludes weekends and legal holidays while six days and more includes weekends and legal holidays. Time is of the Essence.
Back in the days when I received awards for the design of corporate annual reports, I attended an awards banquet in New York City. The keynote speaker asked: what is the most important number in any financial statement? Answer: the date.
Without a date, all other numbers are meaningless. Without minding the dates, we would never close a transaction.