Q: Other Brokers in our area are sending out “counter offers” that do not modify or change the terms of the offer; instead, the document labeled “Seller Multiple Counter Offer 1” states: “Seller requests Buyers submit their highest and best offer.” This practice does not sit well with me. Is this “Seller request” really a Counter Offer?
A. Unfortunately, too many real estate licensees have become confused by the true definition of and requirements for a legally-enforceable Counter Offer; they have confused “requests” (which can easily be made orally or in writing, such as an email) with the purpose of a Counter Offer.
The legal definition of a Counter Offer in real estate contract law is a writing signed by a party which seeks to modify or change the terms of an Offer to purchase or an earlier Counter Offer. As a contract document, the terms must be precise and legally enforceable such that Acceptance of the Counter Offer will create a binding Contract between the parties.
The same case law that finds sharp offers, relative bids or escalation offers (“Buyer will pay $1,000 over best offer”) to be void would apply to Counter Offers that contain requests. The terms are too uncertain to be Accepted as written and thus are not legally enforceable.
PRACTICE TIPS:
1. If the Seller wants a Buyer to submit a better offer, the Seller should instruct the Listing Agent to do so, preferably in a writing. This can be done by e-mail; alternatively, the Seller can initial the “rejected” box at the bottom of the Residential Purchase Agreement (or the “non-acceptance section of the PRDS® Contract) and write on the document that “Seller requests Buyer submit highest and best offer”.
2. The Buyer would then submit a new Offer with the Buyer’s highest and best terms; the Buyer should not simply be asked to rewrite the first page.
3. Real estate licensees have fiduciary obligations to protect their clients by creating legally-enforceable documents; short-cuts or misuse of contract forms for expediency not only create unnecessary risk but actually thwart the proper creation of binding contracts.
This Weekly Practice Tip an attorney client privileged document and 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 2018 Broker Risk Management 09/28/18