BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
Withdrawing and Revoking Counter-Offers
Q: I am a listing agent. What is the best way to revoke a counter-offer once I have delivered it to the buyer agent if, for example, a better offer comes in on the property? I hear conflicting advice on the best method for doing that.
A: Good question.
Even though a counter-offer has an expiration date and time, it may be withdrawn and revoked at any time.
A typical situation occurs when sellers have issued a counter-offer to a buyer, and then a second, more desirable, offer is received. In that case, sellers will likely want to withdraw and revoke that first counter offer (“CO1”) and issue a second counter-offer (“CO2”) or a multiple counter-offer (“MCO”). The first, and most important, step is to properly and quickly communicate to the first buyer agent (“BA1”) sellers’ withdrawal and revocation.
Follow these steps carefully to withdraw and revoke CO1:
1. Upon receiving a second offer, immediately forward the offer to sellers and then ask sellers if they want to consider this second offer, or just reject it. If they want to reject it, advise them to either sign on the last page rejecting it (e.g., CAR forms and PRDS), or draw a line across the first page, writing “Rejected” and initialing and dating it. (BTW, this should be done on all offers rejected by a seller.)
2. If sellers want to consider the second offer, ask sellers if they authorize you to withdraw and revoke CO1. Tell sellers that you will need them to confirm this authorization in writing. (See paragraph 4, below.)
3. DELIVERY OF WITHDRAWAL AND REVOCATION: When you have sellers’ authorization to withdraw and revoke CO1, IMMEDIATELY (do not wait – this is Priority Number 1 at that moment):
A. Check your inbox, email and texts to see if CO1 has been signed and returned to you. If so, then advise sellers. Refer any questions as to whether there is a ratified contract at that point to your manager.
B. Call BA1 and advise him/her:
“Sellers hereby withdraw and revoke sellers’ counter-offer on _____(Property Address) _______.”
(Yes, offers and counter-offers can be withdrawn and revoked verbally, although it’s not a good idea to do so, at least without written confirmation and/or reliable witnesses.)
C. Use specific language. Do not say, “Sellers are going to withdraw the counter-offer” or, “Sellers have authorized me to withdraw the counter-offer.” That leaves room for a buyer to argue that there needed to be another step to actually withdraw CO1.
D. If you cannot reach BA1 by phone, leave a voicemail with that message, also stating the date and time.
E. Then, also send a confirming email and a text to BA1:
“This is to confirm that the counter-offer on _______(Property Address) _________ was orally withdrawn and revoked on _______________ (date), at ____________ (time).
F. It is also helpful if you have the contact information for the broker or branch manager for BA1, and email them also. These communications set the exact time when the oral withdrawal and revocation was delivered.
4. CONFIRMATION OF SELLER AUTHORIZATION: Also, immediately have sellers confirm IN WRITING their authorization to you to withdraw and revoke CO1. This can be done in one of two ways:
A. “Withdrawal of Offer” form (form WOO on zipForms): This form actually can be used with all purchase agreement forms. If there is time and sellers are accessible, fully complete both paragraphs 1 and 2 of the form, being sure to check box 1.B indicating that sellers have issued a counter-offer; and checking the box in paragraph 2.B indicating that this is a written confirmation of the prior verbal withdrawal and revocation.
(Note: The WOO form can be used as the method to confirm the oral withdrawal and revocation of CO1 if it can be quickly signed by sellers, in which case it can be forwarded to BA1 as the confirmation of the oral withdrawal and revocation.)
B. If there is not enough time to complete a WOO form and obtain sellers’ signatures, instruct sellers to promptly send you an email:
“This is to confirm our verbal authorization to you as our agent on _____________(date), __________(time) to withdraw and revoke the outstanding counter-offer on our property at ____(Property Address)____ from ________________, as Buyer.”
PRACTICE TIPS:
1. LISTING AGENTS: If you have an outstanding counter-offer and a second offer comes in, immediately follow the above procedures. If you delay and BA1 returns a signed, unchanged CO1, then there is an accepted contract. To protect your sellers’ option to consider an additional offer, or offers, move as quickly as possible.
2. LISTING AGENTS: If there is a question as to whether CO1 has been properly withdrawn and revoked, or if there is a question as to the timeliness of the return of a signed CO1 by BA1. DO NOT allow your seller to sign another offer or counter-offer, until the matter has been resolved. And do not give legal advice to your sellers as to whether a contract has been accepted. Refer your sellers to a qualified California real estate attorney before they act; and discuss the matter with your manager. You do not want to be in the position of having sold the property twice.
3. BUYER AGENTS: If you receive a counter-offer from sellers, advise your buyer to move quickly if they want to accept that offer, because sellers may withdraw and revoke their counter-offer at any time.
4. Generally speaking, electronic delivery of a signed offer or counter-offer is considered “Delivered” if it has been sent and personally received by the other party or their agent. However, whether a contract has been accepted by the parties is a legal conclusion.
5. If sellers or buyers have a question as to whether a contract has been formed, refer them to a qualified California real estate attorney for advice.
See Weekly Practice Tip: “What Constitutes Acceptance of a Contract” for more detail.
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.