I suppose that depends; are you asking as a buyer or a seller?

In today’s real estate market, a closing date almost always plays second fiddle to the actual price a buyer is willing to pay, or the price a seller is willing to accept.

But there are occasions when the closing date just won’t work for one party, and that can mean the difference between having a sale, and not.

When we’re in multiple offer scenarios, the closing date is even more important.  Let me explain why…

When I lay out the Agreement of Purchase & Sale to a buyer, who is about to sign on the dotted line, I often ask, “Do you want the Coles Notes on this, or do you want to go through everything?”

Most of the time, the buyers are people I’ve been working with for a long time – often second or third time clients, and they’ve done either gone through an offer before, or have no issues with me glossing over the bullet points, or both.

The standard Agreement of Purchase & Sale is a TREB form, of which 95% is pre-printed, standard clauses.

There are only a handful of negotiable points, notably:

-Offer Price
-Deposit Amount
-Irrevocability (when the offer expires)
-Closing Date
-Inclusions & Exclusions (chattels and fixtures)
-Clauses & Conditions in the Buyer’s Schedule A
-Clauses & Conditions in the Seller’s Schedule B

Now the clauses and conditions in the schedules can be very complicated, and can be something a lawyer or another expert has to look over.  They can also be quite simple, and just include the one standard clause, in which the Buyer promises to pay the balance of the purchase price to the Seller upon closing.

So while I don’t want to gloss over the Schedules, I can honestly say that more often than not, an offer is somewhat “basic,” and there are only a handful of negotiable points that a buyer, seller, or both parties are interested in, and affected by.

We all know that the offer price is of the utmost importance, and we know that the deposit amount can hold little bearing on the deal (ie. a $200,000 deposit on a $300,000 condo is insane, but doesn’t really wow the seller, since the buyer gets the interest on the deposit), but what about the importance of the closing date?

We’re in a seller’s market, and it’s very common for the seller to simply point and shoot: tell the buyers what day they want to close.

I can’t tell you how many times I’ve been in multiple offers, presenting, say, a June 15th closing date, and the listing agent reads over my offer and says, “We’d really love June 12th.”

There’s little you can do as a buyer, since the seller has all the leverage (assuming there are seven competing offers), and by not changing your closing date, you run the risk of losing the property.

In reality, I’m sure the seller wouldn’t take a lower price over the difference between June 12th and June 15th, but there’s nothing to stop the seller from going to the buyer with the ideal closing date, who might have the second-highest offer, and saying, “Hey we want your offer, we like your closing, so can you add $6,000 to match the offer we have in hand?”

You just never know.

This brings me to the point I wanted to make today about an extremely long closing date, and how that could affect a seller’s position.

I saw a listing last week for a property that was asking for August 21st as a closing date.

August 21st.

Yes, as in the 8th month of the year.  As in the end of summer.  As in – we’re currently in winter!

The average closing date in Toronto is 30-60 days, and I’d say that more often than not, a closing date is closer to 30 days than it is to 60.  Splitting hairs, yes, but when I see a request for a 90-day closing, I consider that to be a “long” closing.

So what about the request for a 174-day closing?

Isn’t that nuts?

Don’t get me wrong – a seller can ask for whatever he or she wants.  They can ask $1,000,000 for their $600,000 house, it’s entirely up to them.

But in 2014’s Toronto market, a prudent seller can often rake in a massive premium over what they “woulda, coulda, shoulda” got for the house, depending on timing, marketing, staging, pricing, and a slew of other variables that all add up to either provide a windfall, or severely disappoint.

So shouldn’t that seller do everything in his or her power to launch the “perfect listing?”

Consider that the way most houses are sold today in Toronto is by under-pricing, and hoping to solicit multiple offers.

So let’s say you feel your house is worth $650,000 on a good day.  We all know that you don’t price at $650,000.  You likely price at $579,900, and thus you attract more buyers, and often people who are pre-approved for $550,000 max purchase price, but have no clue what planet they live on, and end up “hoping” they can get the property for below the list price.

If you do everything right, perhaps you get $700,000 for your house.

Hate the game, not the player…

But in order to get that $700,000, you need to ensure that you have ten or twelve buyers come to the table.

You can’t list a house at $579,900 and expect to get $700,000 if you only have, say, two buyers for the house.

So work backwards here, and realize that you NEED to get those 10-12 buyers to the table, and thus you NEED to create a massive, across-the-board appeal.

And perhaps a 174-day closing date isn’t the way to do that.

I could be wrong, but how many of today’s active buyers would entertain closing on August 21st, 2014, when they offer on March 2nd?

Consider how many of these buyers have been looking for months!  Or longer!

Take a young couple who started looking at MLS listings last August, and then contacted an agent in September.  They began looking at houses, and eventually learned the ropes, gained the necessary knowledge, and made their first offer in October.  They lost in a multiple offer situation, and then lost again in November.  The market cooled in December, and they didn’t see anything they loved in January.  Now at the end of February comes this incredible house, and they’re super-excited, but in order to get that house, they have to offer the highest price, AND……..close on August 21st.

All told, that would be basically one year after they started their search.

And I think for some buyers, that’s not going to work.

So if you NEED those 10-12 buyers to get $700,000 for your $579,900 listing, you might not be successful if you’re asking for a 174-day closing.

This is a tremendously risky proposition for the seller, and I think it’s a mistake.

Our market is so sensitive, and, its participants are often used to things being done a certain way.  Just as well all expect to see bowls of lemons and limes and a tray of green apples in the kitchen, we also expect a 60-day closing.  When a buyer sees that 174-day closing, they might elect to pass on the property.

And if a handful of buyers pass on the property because of the desired closing date, then the whole house of cards comes down.

This seller should have either waited until mid-May to list the property for sale (and May is a fantastic market!), or asked for a 60-day closing.

I have to think this is going to affect the eventual sale price, although I guess the seller will never really know what could have been…