Q: We recently issued a Seller Counter Offer (CAR Form SCO) to an Offer presented by another Broker’s Buyer. We gave the Buyer 24 hours to accept that Counter. Before the Buyer responded to that Counter Offer, we received another Offer from a different Broker’s Buyer that the Seller liked but wanted to counter. The SCO specifies that we can still market the Property to other Buyers and the Expiration portion of the SCO states that the Seller can accept another offer before the SCO is Accepted, but we were worried about how to safely proceed.
Can you detail the steps that we should take to deal with this situation properly and how to best protect the Seller’s interests? Should we use the Withdrawal of Offer (CAR Form WOO) regardless of which Offer was received (i.e., does it work with the SFAR and PRDS forms)?
A: Yes. The WOO form is an excellent tool to use for a Seller to withdraw/revoke a Counter Offer but only if certain steps are taken before the Buyer “Accepts” that Counter Offer. This particular CAR form can be used with other types of contract forms in addition to those forms found in the CAR forms library.
NOTE: This Weekly Practice Tip will focus exclusively on the Best Practice Steps that should be taken when withdrawing/revoking a Seller’s Counter Offer. However, the same steps apply to withdrawing/revoking an Offer or a Buyer’s Counter Offer that has yet to be Accepted.
Acceptance is legally defined as having two component parts: Signature and Delivery. The Seller’s Counter Offer is “outstanding” unless and until (1) the Buyer signs that Counter Offer and (2) the signed Counter Offer is Delivered back to the Seller in the manner specified in the Agreement. Once the Buyer signs and Delivers the Counter Offer as specified, there is an Accepted Agreement, and the Seller cannot withdraw/revoke the Counter Offer. Acceptance does NOT require that the Seller or Seller’s Agent initial the Confirmation of Receipt section.
A Counter Offer is withdrawn/revoked when the withdrawal/revocation is communicated to the other party or the other party’s Agent. The withdrawal/revocation can be communicated orally but it is often difficult to prove that it was done in a timely fashion. Although there is no legal requirement for a specific form to withdraw/revoke an outstanding Counter Offer, the WOO form was created to make it easier to document the Client does not want to go forward with an outstanding Counter Offer and the WOO form prompts the Agent to document that there has been an oral withdrawal and revocation. An email can suffice if time does not allow for a WOO to be prepared provided the steps below are followed.
BEST PRACTICE: The Best Practice is to take all of the following 3 STEPS in sequence or, if possible, concurrently to withdraw/revoke a Seller’s Counter Offer
(NOTE: These steps can be easily modified to deal with a Buyer’s Offer or Buyer’s Counter Offer):
STEP 1: CALL and orally advise the Buyer’s Agent, either directly to the agent or by voicemail, that “The Seller has instructed me to withdraw and revoke the outstanding Counter Offer which is hereby withdrawn. I have not received the signed Counter Offer from you or your client.” Use the telephone number the Buyer’s Agent has indicated needs to be used to contact that Agent; avoid leaving a message in the Broker’s general voicemail box.
STEP 2: CONFIRM immediately by writing down the Buyer’s Agent’s name, the number called, the date and time of the call and whether you spoke directly to the Buyer’s Agent or left a detailed message; then summarize what was said. While this can be done as a note to the Broker file, it is best if immediately after the call, all of that information is confirmed in a text message and/or email, or both, that is sent to the other Agent. At a minimum, the message in the text or email should state:
“This will confirm that the Seller has instructed me to withdraw and revoke the outstanding Counter Offer. I advised you [or left a message for you on your voicemail] at [date], [time] at [telephone number used] of this information and that the Counter Offer has been withdrawn and revoked.”
STEP 3: The best practice is to also have the Seller document that the Seller is withdrawing and revoking the outstanding Counter Offer by using Part 2 of the WOO form – this should be done as quickly as possible after the Agent has completed Steps 1 and 2.
WITHDRAW AND REPLACE: The Seller has the ability to completely withdraw and revoke the outstanding Counter Offer or “replace” it with a Multiple Counter Offer. If there is to be a replacement of a Counter Offer with a Seller Multiple Counter Offer (CAR form SMCO), the Seller’s Agent should still check the box in 2B, complete all of the information requested AND then check the box in 2C. If the box in 2C is checked there MUST be a Replacement Multiple Counter Offer attached to the WOO form AND the date of the Multiple Counter Offer should be inserted into the blank line in 2C. The Seller then signs below Part 2 of the WOO form and the WOO should then be Delivered to the Buyer’s Agent.
Just as is true with the “Confirmation” portion of all of the other CAR contract documents, even if the Buyer’s Agent does not initial in the Confirmation section of the WOO form, the Seller’s Agent has still perfected the revocation as long as the Seller’s Agent has proof (e.g., such as an email) that the WOO was delivered to the Buyer’s Agent, “Speed is of the Essence.”
WARNING: If the Seller wants to accept another Buyer’s Offer, make certain that the Seller has been advised, in writing (such as an email) to put the new Buyer in back-up just in case the first Buyer or Buyer’s Agent tries to claim that the “outstanding” Counter Offer was Accepted. The advice on this issue is essentially the same as when a Seller wants to cancel an existing Contract.
For more information on the Seller cancelling, see our prior Weekly Practice Tip: “Cancelling the Contract-Seller.”
PRACTICE TIPS
- SELLER’S AGENTS: If cancelling a Counter Offer, notify the Buyer’s Agent both by phone and in writing IMMEDIATELY after Seller has authorized withdrawal of the Counter Offer, and as close in time to each other as is possible.
- BUYER’S AGENTS: If you receive an SCO or SMCO from Seller’s Agent, get your Buyer to respond to it (by signing it or issuing a BCO, and delivering to Seller’s Agent) ASAP. The longer the delay, the greater chance for the Seller to withdraw their Counter Offer.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
© Copyright Broker Risk Management 2019 05/24/19