Making an offer on SFH with a "30 day study period" clause?

Question

HelloMy agent suggested I make an offer on a single family home with a "30 day study period" clause. She said this would give me time to go to the county and do my homework, and if things didn't work out with the county I could bail on the offer.Wanted to get thoughts from anyone who's used "study period" in their offers before. I haven't heard of such a clause.Miz

James Wise · Answer

A seller is not going to want to let you tie up their property for 30 days for such an open ended clause.If I am selling you the property I am going to tell you to go to the county and do your homework, when your homework is done make me an offer.You can submit an offer with specific clauses. If you want to do a home inspection that is fine as long as it is done in a reasonable amount of time. Usually 3-10 days. If it is a financing contingency sellers are looking for a pre-approved buyer with the only out being inability to get said financing.30 days to kick the dirt around makes no sense from a selling standpoint.

Lynn McGeein · Answer

You are basically asking someone to tie up the sale of their home for a month so you can decide if you're serious or not, with no penalty to you if you choose not to take it. Contingencies for a specific reason, completing a home inspection within 7-10 days, contingent on financing with a pre-approval in hand, etc., make sense, where you need a reasonable condition met to complete the sale and you obligate yourself to the contract if that condition is met. For an open "study period," my response would be, go do your homework first, and if it's still for sale when you're done, then make me an offer. I might listen to the option route, where you pay me x dollars for the right to purchase my property at a certain price within 30 days, and you forfeit the option fee if you don't exercise the option, but that would likely only be if it had been on the market for quite a while with no offers.

Manish A. · Answer

@Lynn M. @James Wisethanks for your advice to this newbie. Would you guys mind elaborating a little so I can understand why that is laughable or why I should find a new agent?ThanksMiz

Lynn McGeein · Answer

I think you should find a new agent.

Andreas W. · Answer

@Manish A. I guess, there is more to the study idea. A 30 day due diligence period is common. But for that to accept you have to offer due diligence money sent to the seller together with the contract proposal. In some states, not sure about MD, contingencies are outdated. You can withdraw from the offer inside the dd period for whatever reason. The dd money stays with the seller whose house was off the market for that time. Of course, if it is an attractively priced house, you are competing with other, often better offers and the seller might ignore your offer and go into contract with someone else. As pointed out, this depends on how attractive the property is. If the study time is really the whole story, then, yes, by all means, get an agent with some experience.

Mike F. · Answer

Keep in mind advice given may or may not apply to you, because different locations have different markets going on. All the advice given that no seller would accept the offer are based on sellers markets, but in a buyers market who knows what a seller might accept. Also the individual property can influence how the seller would react, even in a strong sellers market there can be individual properties that have issues with them that make them very difficult to sell so the seller might consider any offer presented.For instance we recently sold a nice townhome in a nice community, within a week we had 3 cash offers, two of which were 6-7% over asking, further they waived appraisals. With that property in this market in Denver I'd have never accepted an offer with a 30day contingency in it, that offer simply wouldn't have even been something to consider.Take another example of a non-conforming property 20 miles away on the plains east of Denver, the property is messed up, total wreck, far from populations that would want to rent there, the farmer has had the property on the market for 2 years. A property like that with it's unique situation, the seller might accept a offer with a 30 day contingency.I'd ask the realtor why she believes the seller wouldn't reject that offer and post back what she says.One simple metric would be how long has the property been on the market? A seller with a property on the market for 600 days is going to be a much different seller than one who just put it on the market last week.

Lynn McGeein · Answer

Sorry, didn't see @James Wise 's post until after I replied. What he said...

Thomas Whitehead · Answer

I also have not heard of a "study" clause. Is your agent referring to a "Due Diligence" Clause? This is clause is common and will protect you as you do some research of the property. You may not get the 30 days but most sellers will allow 21 days, which is also enough time to secure your financing.Hope this helps.

Neil Aggarwal · Answer

I am also an agent and I have never heard of a "study" period. I believe she is referring to an "option" period. I find it strange the agent is not using the proper term.

James Wise · Answer

Sellers do some crazy things sometimes so someone may be ok with it but the majority of sellers would likely laugh at that offer.