Fact Pattern: We are the listing agent. We received a lowball offer from Buyer 1, and so we issued a Seller Counter Offer (SCO). Before we got an answer from Buyer 1, we received a much better offer from Buyer 2 that the seller wanted to accept immediately. So we issued an SCO to Buyer 2 stating nothing more than “subject to receipt of a Withdrawal of Offer (WOO) from another buyer.”

Multiple Choice Question: Was that the best way for us to handle the situation? Pick the best answer.

A. Yes.
B. No, because instead of writing “subject to receipt of WOO,” the listing agent should have attached a completed Back-Up Offer Addendum (BUO) to the SCO to Buyer 2.
C. No, because the listing agent should have issued a WOO to Buyer 1, followed by a Seller Multiple Counter Offer (SMCO) to both buyers.
D. No, because the seller should have just accepted Buyer 2’s offer.

Answer: Answer A is wrong. The phrase, “subject to receipt of WOO from another buyer,” is ambiguous, and may give rise to disputes. Examples abound. Does the WOO have to be signed by the other buyer? Is there a timeframe within which the WOO must be received? Is Buyer 2 allowing the seller to continue to negotiate a deal with Buyer 1 before receipt of the WOO? What happens if the WOO is not received? Can only the seller cancel under that circumstance, or can the buyer cancel as well?

Answer B is vastly superior to Answer A to the extent that the BUO clarifies the ambiguities mentioned above, among other things. However, the BUO states that the seller is in contract with another buyer, which is not the case in our situation.

Answer C is not the best answer. If the seller had decided to issue an SMCO to both buyers, then Answer C would be correct. However, in the above Fact Pattern, the seller wants to accept Buyer 2’s offer immediately. It makes sense that the seller no longer wants to negotiate with Buyer 1, given that Buyer 1 submitted a lowball offer to begin with.

Answer D is the best answer. Under the SCO issued to Buyer 1, the seller has the right to accept another offer before Buyer 1’s acceptance has been personally received by the listing agent or seller (see paragraph 2C of the SCO and paragraph 30A of the RPA). Answer D is also better than writing “subject to receipt of a WOO” on an SCO because, if the seller issues an SCO to Buyer 2, Buyer 2 does not have to accept the SCO. But if the seller accepts Buyer 2’s offer as in Answer D, we have a done deal.

-Thank you to Dean Stalter (Broker of Record) for suggesting this week’s legal tip.

Copyright© 2019 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of July 15, 2019. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals.