#TerminologyTuesday: Irrevocable

The word IRREVOCABLE means "not able to be changed, reversed, or recovered".  And that is basically what it means in reference to a real estate contract, or "offer" as it is commonly called.

When you make an offer, there is a clause in the standard OREA form to make it irrevocable for a specific period of time.

"This offer shall be irrevocable by (Seller/Buyer) until (time) on the (date) day of (month), 20xx, after which time, if not accepted, this offer shall be null and void and the deposit shall be returned to the Buyer in full without interest."

Until that deadline has passed, the offer can not be changed or withdrawn by whoever made it (typically the buyer first, but this applies to counter-offers from the seller to the buyer as well).  The party to whom the offer has been made has until that time to accept it and communicate acceptance.

While not technically required for a contract in general, the nature of real estate makes this a pretty standard part of the process.  It gives the seller assurance that the buyer will be bound but also gives time to consider other offers that might come in.  And it gives the buyer an idea of when to expect an answer, not held in indefinite limbo while a seller considers it and possibly waits for other offers to come in.

On that note, a shorter time period can put pressure on the sellers and is generally better for buyers, while a longer time period works in favour of the sellers as they can bide their time a little to see if anything else does come in.  In practice, it's a balancing act between giving what is necessary and trying to protect your own interests as well.  The listing may ask for a 24 hour irrevocable, but the buyer is not strictly required to oblige that request, just like they're not required to give full price or any other terms outlined in the listing.

But then, the seller may be from out of country, in hospital, or any of a host of other possible scenarios that might require some time to respond, and a shorter deadline may not be feasible. You might just be shooting yourself in the foot and irking the seller for no reason.  And even if there is no 'good reason', it's still one thing the seller is looking for that you're not giving them, so it all has to be considered strategically and with an overall view of the rest of the offer.

Make sure you work with a competent and experienced real estate professional, and trust their advice.

Market Media Monday for August 26, 2024

A curated list of recent headlines relevant to real estate in Canada, with short excerpts. Click each headline link to read the full article on the source site.

[ Open bidding in Ontario: Game-changer or business as usual? ]
"Late last year, changes to Ontario’s real estate legislation, the Trust in Real Estate Services Act (TRESA), came into effect, making open bidding legal in Ontario. (Real estate is generally regulated at a provincial level, so as of now, these changes only apply to Ontario.) It was big news at the time, but has it made a big impact? Here’s what this legislation means for buyers and sellers in the province, and how it could influence the housing market."

[ Young Canadians have ‘no shortage of barriers’ but are still optimistic about homeownership, report says ]
"About 84 per cent of Canadians aged 18 to 38 say that owning a home is a worthwhile investment, according to a recent Royal LePage survey, and 54 per cent believe it’s an achievable goal."

[ Canadian Real Estate Inventory Grew More Than 2x The Rate of Sales ]
"Canadian real estate prices have yet to budge, but there’s a lot more inventory hitting the market. Canadian Real Estate Association (CREA) data shows new listings surged in July 2024. An army of sellers hit the market last month, sending new listings to grow at more than double the rate of sales. Some of the country’s biggest markets are now seeing double-digit growth, as sellers potentially overestimated the impact of rate cuts stimulating buyers."

[ ‘It could happen over time’: Former CMHC chair on longer mortgage terms in Canada ]
"The former chair of the Canada Mortgage and Housing Corporation (CMHC) says longer mortgage terms like those typically seen in the U.S. could eventually be offered in the Canadian market, but it would require a number of fundamental changes."

Market Media Monday for August 19, 2024

A curated list of recent headlines relevant to real estate in Canada, with short excerpts. Click each headline link to read the full article on the source site.

[ Should Canada ditch the mortgage stress test? What experts are saying ]
"Despite recent interest rate cuts, the Canadian real estate market remained slow this summer. This has prompted some in the industry to call for an end to the stress test – a tool that determines whether a person can qualify for a mortgage. But would it be a good idea?"

[ Canadian Real Estate Is Stable, Toronto Condos Are An Exception: BMO ]
"No news is good news, especially for real estate investors looking for markets to stabilize. BMO Capital Markets dived into existing home resale data, and found little movement in July. Inventory is outpacing sales but they believe stocks are largely just being replenished. Toronto condos are a notable exception, where they are starting to see a supply glut. Considering Toronto real estate led Canada’s markets on the way up, it’s worth paying attention to see if it leads on the way down."

[ Canadian home sales dip as mortgage costs stay high ]
"National home sales declined in July as mortgage costs remained high, despite recent interest-rate cuts by the Bank of Canada, reports the Globe and Mail."

[ Posthaste: Take heart, Canada's housing market hasn't been this stable in years ]
"Canadians have been watching the housing market like a hawk since the Bank of Canada began cutting interest rates, hoping for a rebound from the post-pandemic doldrums. So far though that has failed to materialize. There was a bit of a spark after the central bank’s first rate cut in June, but in July the market “took a pause,” according to data released by the Canadian Real Estate Association last week."

Market Media Monday for August 12, 2024

A curated list of recent headlines relevant to real estate in Canada, with short excerpts. Click each headline link to read the full article on the source site.

[ Is it better to buy or rent? An expert shares her insights ]
"With increased supply outpacing demand, prices are lower in some markets, which gives buyers an edge, Reddy said. It could be time to take advantage of the buyer's market."

[ Why Canada’s cottage country has changed forever and the Home the Week ]
When you think about Canada’s cottage country, your mind wanders to natural landscapes, a cottage dock jutting into serene waters, bordered by lush forests with the call of loons emanating from somewhere distant. But there’s a looming profanity in paradise, writes Sam Riches, in the form of short-term rentals.

[ Stalled jobs market paves way for Bank of Canada to keep cutting interest rates ]
Canada’s unemployment rate held steady at 6.4 per cent and the economy shed about 2,800 jobs in July, a soft monthly reading that economists said paved the way for continued interest rate cuts by the Bank of Canada.