How binding is a bid?
In short, a bid itself is not immediately binding. It can always be changed or withdrawn by the candidate. The offer only becomes legally binding when it is incorporated into a written purchase agreement and signed by both parties. Once the three-day statutory cooling-off period has expired, the sale is only finalized.
Did all this go a little too fast? Don't worry, in the article below we explain everything again calmly step by step. So you know exactly where you stand in your housing search.
Submitting an offer
After making an offer, there is not yet a (legal) bond between the candidate and the seller. In most cases an offer is made as an opening proposal, the candidate invites the seller and real estate agent to a negotiation.
If there is a sale through a (closed) tender, then the bid is regarded as an extreme proposal. Even in this case, the bid is not yet binding because an award has not yet been made.
At this stage, you as a candidate are completely free to change or withdraw your bid.
Allocation of a bid
Allocating a bid means entering into a preliminary (verbal) agreement between the candidate and the seller. Allocation can be done on the basis of an opening proposal, during a negotiation, or on the basis of award after a tender. By assigning, the two parties start preparing an agreement. In practice, this means that the real estate agent gets to work drafting a purchase agreement.
If you have been assigned as a prospective buyer, it is still possible to change and withdraw your bid. However, keep in mind that this will likely disqualify you as a prospective buyer.
Signing the purchase agreement
After allocation, the details of your bid are incorporated into a written purchase agreement. The draft of this is usually shared with both parties for review. Once everyone agrees with the contents, the agreement can be signed. This step fulfills the legal requirement of being in writing.
Until the moment of signing, both parties can get out of the sale. The prospective buyer is therefore free to change or withdraw the offer. However, keep in mind that this will probably make you ineligible as a potential buyer.
Three days legal reflection period
If both parties have signed, the three-day legal cooling-off period starts at the moment from the last signature. At this point, the seller cannot abandon the sale; the buyer can do so without giving any reason within 72 hours of the cooling-off period (possibly extended by national holidays).
After the reflection period has expired, the bid has become fully binding. If, as a buyer, you still want to abandon the property, chances are you will have to pay the legal penalty of 10% on the transaction price from your offer.
Role of reservations
If your offer includes caveats such as a financial or technical inspection, the purchase can be cancelled under specific conditions. If the mortgage is not arranged or if a technical inspection reveals high repair costs, the purchase will not go through, provided this is properly indicated in your offer.
In this blog, we've given you answers to the question: how binding is an offer? If you have other questions about the sales process, take a look at related blogs or email us at firstname.lastname@example.org