Offers and Counter Offers from a Buyer Perspective

When a buyer of real estate makes the decision to put an offer in on a property there are a number of scenarios that can result. A buyer naturally asks the agent at this juncture “Now what happens?” This post is designed to explain how offers are handled and what buyers can expect during the offer process.

The agent advises – the client decides:

Decisions about how offers will be presented, negotiated and ultimately accepted or

rejected are made by the client – not the agent. All offers must be communicated and agent

must keep client informed of any news related to the status of the offer.

Once a buyer’s offer has been sent to the seller, it’s the agent’s job to keep the buyer informed on any developments.

Terms of offers and counter offers are confidential:

The terms of offers and counter offers may not be disclosed by an agent without the prior written consent of both the seller and/or buyer. Disclosing that a full price offer has been made is disclosing a term and may be a violation of confidentiality.

The seller’s agent cannot legally disclose the terms of the buyer’s offer to any party but the seller.

The seller decides whether the existence of an offer or competing offer is confidential:

Disclosing that on offer has been made or that an offer may be received is not confidential

information unless the seller asks the agent to keep such information confidential. The seller is not obligated to acknowledge, counter or reject an offer and may inform other buyers of existence of an offer to obtain better terms or price, or may do nothing.

The seller’s agent can legally disclose to other buyers or potential buyers that they have received an offer. This is just part of the seller agent’s duty to get the seller the highest or best offer.

A full-price offer does not obligate the seller to accept the offer:

Listing property for sale is an invitation from the seller for buyers to make offers. The seller is

not obligated to sell the property even if a buyer makes a full price, cash offer. Competing offers may be made and  in a competing offer situation only one offer will result in a sale and one or (or more) buyers may be disappointed.

This is not fully understood by most buyers. Before the seller signs anything, they are not obligated to sell their property even at full price.

There is no priority of offers:

The first or highest offer made does not bind or otherwise limit the seller to act upon that offer

before considering any other offers.

The seller can treat the fifth offer with as much consideration as the first. The seller does not even have to accept the highest, or any, offer.

The seller can do any one of the following with a single offer received:

• Accept, reject, counter, delay during time for acceptance to seek out other offers.
• Do nothing.

The seller can do the following with multiple offers:

•       Accept one offer, and inform no one of the other offers.

•       Reject all offers and encourage higher offers.

•       Counter one offer (may withdraw counter, in writing, prior to acceptance) – do not inform other buyers.

•       Delay acceptance – waiting for another offer.

•       Alert one or more buyers that they are in a competing offer situation.

•       Alert all buyers that they are in a competing offer situation.

•       Consider the pluses and minuses of each option – delaying or inviting all buyers to make

their “best” offer may produce better offer(s) or may discourage buyers who may withdraw.

•       Do nothing.

In a multiple offer situation, a buyer may be asked for their highest and best offer. The happens often with foreclosure properties. In this situation a buyer may:

• Make better offer by modifying price and/or terms.
• Leave original offer as it was originally presented.
• Withdraw offer in writing if period for acceptance is current.
• Do nothing.

The following are major points a buyer needs to consider when making an offer:

•       The initial offer may be the only opportunity to buy.

•       There is no requirement that the buyer be informed by the seller or listing agent of existence of other offers before another offer is accepted.

•       Seller has the right to negotiate with only one buyer at a time and not reveal this to other

buyers. This negotiation may continue until seller accepts an offer.

•       The terms of buyer’s offer are confidential but the existence of the offer may be communicated to other buyers to obtain better terms or price.

•       Seller may accept an offer on terms other than the price.

If a buyer understands these points before making an offer to purchase, they can be better prepared to negotiate and understand how the process might unfold.