Timing Really Is Everything in a Real Estate Deal

When people talk about “timing the real estate market,” they’re usually asking the same question:Is now a good time to buy or sell?But there’s another type of timing that can be far more important once you're actually involved in a real estate transaction.The timing written into the contract.Offers expire. Conditions have deadlines. Deposits have due dates. Completion has to occur when agreed. Missing one of these deadlines can potentially cause a transaction to fall apart—and in serious situations, result in significant financial consequences.In real estate contracts, there’s a reason you regularly hear the phrase:“Time is of the essence.”Here’s what buyers and sellers in British Columbia should understand.

It Starts With the Offer

Every real estate transaction begins with an offer.In British Columbia's Contract of Purchase and Sale, the offer contains a specific deadline for acceptance.In simple terms, the buyer and seller have until that deadline to reach a complete agreement on the terms of the offer.That can include offers, counteroffers and potentially counteroffers to counteroffers.But ultimately, everything has to come together.Until the parties have agreed to the terms, you're still negotiating an offer.Once everything has been agreed to in writing, you have a contract—and that's when the timelines become particularly important.

What Happens When an Offer Expires?

Imagine a buyer submits an offer that expires at 7:00 p.m.The seller wants to accept it but doesn't sign until 7:05.Or perhaps the seller initially decides against accepting the offer, sleeps on it, and changes their mind the following morning.The original offer has expired.The cleanest approach may be to have a new offer prepared so that everyone's position and the applicable dates and timelines are clearly established.However, an expired offer is different from an expired contract.While negotiations are still taking place, the parties may potentially continue negotiating by changing the acceptance deadline and sending the offer or counteroffer back to the other party.But once everything is agreed upon and a contract exists, deadlines become much more consequential.

“Time Is of the Essence”

The purpose of contractual deadlines is certainty.The contract establishes:What needs to happen, who needs to do it, and when it needs to be done.If one party doesn't perform their contractual obligations on time, the consequences can potentially be significant.That's why buyers and sellers shouldn't view the dates written into their contracts as suggestions or approximate timelines.They're part of the deal.

Conditions Have Deadlines Too

Many real estate contracts contain conditions—often called “subjects” here in British Columbia.Common buyer conditions can include:

• Financing
• Home inspection
• Review of documentation
• Strata document review
• Sale of the buyer's existing property

Sellers can also have conditions written into a contract.Whatever the condition may be, the contract establishes a specific deadline for satisfying or waiving it.Imagine a buyer conducts a home inspection and initially becomes concerned about what they've discovered.They decide they don't want the property and allow their condition-removal deadline to pass.The next morning, they reconsider.They've decided the deficiencies aren't actually that concerning and now want the house.They can't necessarily just pick up where they left off.If the original contract has become null and void because its conditions weren't removed by the deadline, a new offer may need to be prepared.Meanwhile, the seller may have another buyer waiting.Timing matters.

Deposits Have Deadlines

The same principle applies to deposits.The contract specifies when the buyer's deposit is due.Buyers therefore need to understand not only how much their deposit will be, but exactly when and how they're expected to deliver it.Waiting until the last minute to figure out how to access the money can create an unnecessary problem.This is particularly important if funds are sitting in an account that isn't immediately accessible.

Completion May Be the Most Important Deadline

Then we get to completion—what many people refer to as closing.This is where missing a deadline can become extremely serious.If a buyer fails to complete the transaction as required, perhaps because of a last-minute financing problem, the seller may have remedies available to them.The reverse can also be true.If the seller fails to complete their contractual obligations, the buyer may have legal remedies.And depending on what has happened to the real estate market since the contract was originally negotiated, the financial consequences can become substantial.

When Minutes Can Cost a Buyer a Property

There have been British Columbia court cases demonstrating just how seriously contractual deadlines can be treated.In one case I discussed in the video, the buyer was required to complete by a specific afternoon deadline. The necessary funds weren't delivered until later.The buyer ultimately lost both the opportunity to purchase the property and their deposit.Another case involved a substantial buyer deposit, with the seller ultimately being entitled to retain the deposit even though the property was later sold for more money.These aren't situations where somebody missed a deadline by several months.That's the point.When a real estate contract says something needs to happen by a certain time, buyers and sellers should treat that deadline seriously.

Amendments Can Affect Timing Too

Timelines can become particularly important when an existing contract is amended.Perhaps the buyer and seller agree to change the completion date.That sounds straightforward, but changing a contractual deadline can potentially introduce questions about how strictly the newly agreed-upon deadline should be interpreted.This is why the wording used when amending contracts matters.It's another example of why real estate contracts aren't simply forms that should be signed without understanding what they mean.

Your Agent Should Be Managing More Than the Negotiation

A good real estate agent isn't simply there to negotiate the price.Once a contract exists, there are numerous moving pieces that need to happen in the correct order and within the appropriate timelines.Financing may need to be finalized.An inspection may need to occur.Documents may need to be reviewed.Conditions need to be removed.The deposit needs to be delivered.Lawyers or notaries need the appropriate documentation.And ultimately, the transaction needs to complete.Your agent should understand these timelines, monitor them and—just as importantly—make sure you understand them too.

The Other Kind of Real Estate Timing

There's one final lesson about timing that's worth remembering.Buyers and sellers spend an enormous amount of time trying to determine exactly when the market will hit its bottom or peak.Unfortunately, consistently predicting those moments is nearly impossible.That's why one of the best-known principles in long-term investing is the idea that time in the market can be more important than attempting to perfectly time the market.But once you've actually decided to buy or sell real estate?That's when timing becomes much less philosophical.Read your contract.Understand your deadlines.Have your financing and deposit organized.Make decisions before your conditions expire.And make sure the professionals representing you are paying attention to the calendar.Because in a real estate transaction, sometimes being right isn't enough.You also have to be right on time.

Written by:
Steve Karrasch PREC
Karrasch Real Properties Team
Macdonald Realty