Learning the Lingo: Irrevocability
The irrevocable period is the timeframe that the offer is open for acceptance and when the offer can no longer be changed or withdrawn by the party that submitted the offer. In, its essence, it identifies the time that the offer expires for the receiving party.
In the OREA Agreement of Purchase of Sale (Form 100 or "the Offer") it reads:
If a Buyer submits an offer to a Seller with an irrevocable period of 6:00 pm on July 3, 2023 AND the Seller wishes to accept the terms and conditions as presented they would need to accept the offer within the stated irrevocable period.
If the Seller wants to accept the offer as presented but does not sign until 6:30 pm, they would not be able to accept the offer. The Seller would have to sign back the offer to the Buyer with a new irrevocability period. The Buyer would then accept the offer within the newly stated period.
If the Seller does not accept the terms as presented, the Seller could outright reject the offer or they could adjust the terms and conditions and sign the offer back to the Buyer. This is commonly referred to as a counter offer.
Irrevocable periods can be as short as a few hours or as long as days. In our Niagara market, we typically see irrevocable periods between 12 and 48 hours. When it comes to deciding how long or short a irrevocable period should be, i really depends on the market conditions and the terms of offer. If a Buyer is submitting an offer on a property and there is a lot of activity it may be beneficial to have a shorter irrevocable time. When dealing with a commercial property, an estate sale, or a bank sale it may be necessary to give the Seller 48 hours. Determining the irrevocable period is another element of the offer strategy.
A misconception about the irrevocable period is that it is the deadline that the receiving party needs to respond by. Although, it is a courtesy to respond within that period there is no obligation to. It is simply, the period that the submitting party is bound to the terms and conditions and is unable to withdraw the offer. It is the timeframe that the receiving party has to accept the offer as presented.
The Irrevocability period is only one the many elements within an offer and many do not view it as part of the offer strategy. When writing an offer with the Niagara Sold by Kate Team, we will guide you through every step and highlight the best strategy for your success. If you have more questions about the offer process feel free to reach out to the Niagara Sold by Kate Team. We'd be happy to guide you through all the elements.