Multiple Choice Question: A buyer submits an offer to the seller’s side. After the buyer’s offer has already expired, the seller issues a Seller Counter Offer (SCO). The SCO does not address the expiration of the buyer’s offer. Other than that, the buyer wants to accept the seller’s terms. What should the buyer’s agent do under these circumstances? Pick the best answer:

A. Just have the buyer counter-sign the SCO and hope for the best.
B. Insert right above the buyer’s signature on the SCO that the parties agree that they have a valid contract even though the buyer’s offer had already expired.
C. Issue a new Buyer Counter Offer (BCO) stating that the parties agree that they have a valid contract even though the buyer’s offer had already expired.
D. Let the buyer decide how to proceed. 

Answer: Answer A is not wrong, but it’s not the best answer. Many people handle this issue in the manner described in Answer A. But after the buyer signs and returns the SCO as written, it’s possible that the seller will later argue that there no valid contract after all, because the buyer’s underlying offer had already expired before the seller issued the SCO. It’s not a very strong argument for a seller to make, given that the seller’s conduct in issuing the SCO tends to show that the seller intended to enter into a valid contract. But it remains a possible argument for the seller, nonetheless.

Answer B is not wrong, but it’s not the best answer. Contrary to popular belief, a buyer can insert that proposed language directly above the buyer’s signature on the SCO. However, once that language has been added, we have no meeting of the minds, and the seller could try to claim that there’s no valid contract after all.

Answer C is not wrong, but it’s not the best answer either. If the buyer issues a BCO, the seller would not be obligated to counter-sign it, and we would not have a binding contract.

Answer D is the best answer. Inform your buyer, preferably in writing, as to the potential issue with the expiration of the underlying offer, and let the buyer decide how to proceed. If the buyer goes forward with Answer A, at least you have forewarned our client that the seller may try to cancel. The buyer may prefer Answer B or C instead. The buyer may even want to try something else altogether, such as having us contact the listing agent to ask that they reissue the SCO adding that, “The expiration of Buyer’s Offer is extended to include Seller’s acceptance today, subject to the terms and conditions on this SCO.”

Stay Tuned Next Week: What if the tables were turned? If the expiration of a seller’s SCO#1 is not addressed on the buyer’s subsequent BCO#1, what should the listing agent do?

-Thank You to Rinde Philippe (Santa Monica Office) for suggesting this week’s legal tip!

Copyright© 2022 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 October 3, 2022. 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. Written by Stella Ling, Esq.