What do you do with an offer?

Making a counteroffer may not be a seller’s best move.

by Dennis R. Schmidt   The Code of Ethics and MLS rules both require REALTORS® to submit offers and counteroffers quickly. Remember, though, that the seller controls the method, manner, and timing of the presentation of offers. A buyer may limit the time frame for the seller to consider the buyer’s offer, but a buyer cannot require a seller to take any specific action. So, while it might be in a seller’s best interest to promptly respond to an offer, a seller has no legal duty to respond in any particular way.

How the seller and listing agent respond to an offer depends upon many factors. Is the seller out of town? Is the seller only available on weekends? Common business courtesy and MLS rules dictate that cooperating brokers be informed of any delays expected in the presentation of offers.

The life of an offer

An offer remains open until it is accepted, rejected, or withdrawn by the offeror. A seller can accept the offer as presented, reject it, or make a counteroffer.

A counteroffer by a seller is a rejection of the buyer’s offer and the making of a new offer by the seller. Like any other offer, it remains open until accepted, rejected, or withdrawn. Herein lies the source of the problem with counteroffers. If a seller has made a counteroffer and then receives a better offer from another buyer, the seller should first terminate or withdraw the counteroffer before accepting the second offer.

The mechanics and timing of the withdrawal of a counteroffer can present practical and legal problems for the seller. Was the counteroffer withdrawn before it was accepted by the first buyer? Will the second buyer keep his offer open while the seller withdraws his counteroffer to the first buyer?

When considerable interest in a property is expected and a seller receives an offer that is not acceptable, he has an option besides making a counteroffer.

Avoid problems with an invitation of a new offer

In order to avoid the logistical and legal problems possible with a counteroffer, the seller could use TAR form 1926 (Seller’s Rejection of Offer with Invitation for Submission of New Offer) to tell the buyer that the offer was considered, it was not acceptable, and the buyer might receive favorable consideration if the offer was changed in the manner indicated on the form.

TAR 1926 makes it clear that the seller is not making a counteroffer. By using this form, the seller is free to consider other offers without having to be concerned about the withdrawal of a counteroffer.

The form also makes it clear that the seller will continue to market the property and may accept an offer from another buyer. A buyer receiving this form can review the seller’s suggested changes and consider submitting a new offer that might be more acceptable. The clarity of purpose and intent that this form brings to the negotiation process will greatly reduce offer and acceptance problems.

Does yes always mean yes?

Finally, the acceptance of an offer should always be made with care. Verbal assurances by a seller or a seller’s agent should be conveyed to a buyer with some reservations. Since the seller’s signature on the contract is necessary to make it enforceable, buyers should be told that verbal acceptance must be followed by a signed contract in order to complete the process.

This will avoid the embarrassment and anger that can result from a buyer relying on a seller’s verbal acceptance only to find out that the seller has changed his mind and has not signed the contract. Wait until you have a signed contract before you start to celebrate.

Dennis R. Schmidt is associate counsel for TAR.

Photo © Rubberball Productions.

home   current issue    top 10    resources 

discussions   contact us   search

Buyers & sellers, visit www.texasrealestate.com.
REALTORS®, visit www.texasrealtors.com.