HOW TO CONTROL THE OFFER/ACCEPTANCE PROCESS

April 19th, 2013 at 7:46 pm

As you know, when an offer is made by one party to another, the receiving party is normally in control of the process. Upon receipt of that offer, a buyer or seller can create a binding contract by simply accepting the offer and delivering it back to the other side. In our present market, however, this process can create problems for a seller, especially early in the listing period. After all, it is not unusual for a seller to receive an early offer that they want to entertain. On the other hand, they don’t want a contract finalized because they want to see if other, higher offers come in. By countering the original offer in the normal way, the seller is allowing the buyer to create a contract merely by accepting and delivering it back. So, what can the seller do to change this dynamic and keep control of the offer/acceptance process?

In truth, a couple of very simple changes to paragraph 4 of the Counter Offer form (CAR Form CO) provide your seller with the protection they need. First, in the title to that paragraph, “MULTIPLE COUNTER OFFER,” cross out the word “MULTIPLE.” Remember, in our scenario, we are early in the process and only have one offer for the property. As a result, we cannot say that we have multiple offers. That would be a lie. Next, cross out the first sentence of paragraph 4, which reads as follows: “Seller is making a Counter Offer(s) to another prospective buyer(s) on terms that may or may not be the same as in this Counter Offer.” (Below is an example of how to make these changes.) Again, in our scenario, that statement is not true. At the moment, we are only making one counter, to our Buyer No. 1. With those changes made, our clause no longer makes any misstatements. Instead, it tells the buyer that we are making a counter offer and changes the method of acceptance. Rather than our buyer having the power of acceptance, our counter-offer says that acceptance will not be binding “unless and until it is subsequently re-Signed by Seller…” In other words, if Buyer No. 1 accepts our counter and delivers it back to the seller, no contract is created. Rather, there is no contract until the seller re-signs. As a result, the seller now has control and decides when a contract is created.

So, when you think you have a popular property, but get an early offer from a buyer that you want to keep interested, make these changes. Two simple cross-outs give your seller control. But remember to make those changes so you do not make any misrepresentations to the buyer. That would only cause problems.

As always, please contact your manager if you have any questions and they will get the Legal Department involved if necessary.

Like what you see here? Sign up for more! Our free e-newsletter informs you of listings in your community, insider real estate tips, the latest in home trends, and more.

Recent Posts

Archive