A counteroffer is a
rejection of the offer (or a
previous counteroffer) to which
it is a response. This is an
important point for sellers to
remember in this "normal" market
in which we now find ourselves.
Of course, it is an important
point for buyers to remember as
well.
Imagine the following
scenario:
The Smiths have had their
home on the market for about
five months now. When the
property first came on the
market, both they and their
agent agreed that the property
stood a chance of fetching
$625,000. It turned out that
they were wrong. After the first
couple of months of no buyer
interest at all, they dropped
the price to $610,000. Now it is
it at $585,000, and they have
yet to have what seemed even a
serious offer. That is why they
were pretty excited about the
offer on the table Monday. The
buyer had a good deposit; there
was no for-sale contingency; the
escrow period was agreeable; and
the buyer already pre-approved
for a loan. The only hitch was
the price of $565,000. The offer
gave them seven days to respond.
Actually, Mr. Smith
confided with his agent, the
$565,000 was a price they could
live with -- they never had
counted on being in the
$600,000s. Still, though, they
wanted as much as they could
possibly get -- who wouldn't? --
so they made a written counter
offer of $575,000. They gave the
buyer two days to reply.
Not having heard back from
the buyers by Thursday, the
Smiths decided to accept the
original offer. They provided a
signed acceptance to the buyer's
agent on Friday morning. To the
Smith's dismay, the buyer's
agent informed them that there
would be no contract. The buyers
had changed their minds.
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Can they do that? Can they
withdraw their offer after the
Smiths gave them a signed
acceptance? They sure can, in
this situation. That is because,
when the Smiths made a
counteroffer, that took the
original offer off the table.
A recent memo from the
National Association of
Realtors® (NAR) legal department
emphasizes the point that, when
one makes a counteroffer, that
constitutes a rejection of the
earlier offer.
The NAR memo refers to a
recent case, Theresa Polk v.
BHRGU Avon Properties, in
Florida's Second District Court
of Appeal. There it was the
buyer and not the seller who,
having counteroffered, tried to
"resuscitate" the original
offer. Although the roles were
thus reversed, and the facts
quite different from our
scenario, the point remains the
same. In explaining how a
counteroffer is a rejection, the
Florida court quoted from the
Restatement (Second) of
Contracts: "The termination of
the power of acceptance by a
counter-offer merely carries out
the usual understanding of
bargainers that one proposal is
dropped when another is taken
under consideration."
To be sure, a counteroffer
is not simply a rejection. It is
also an offer. And, typically,
it incorporates many of the
elements of the original offer.
This is generally made clear by
a standard counteroffer form.
Nonetheless, it is central to
the concept of a counteroffer
that it constitutes a rejection
of the earlier offer.
The point for those who
are "close," but still trying to
squeeze a little bit more out of
the negotiation? Remember, when
you make a counter, you are
rejecting what is in front of
you. You should be sure that you
want to do that. |
