In most real estate transactions, there are offers and counteroffers submitted from buyers and sellers. It is important to know what is binding, what is void, and who has the option to cancel. This quick overview will help you better understand MA real estate offers and counteroffers.
The Initial Offer
Home buyers submit the initial offer on a property, usually in writing. In this day and age, it is unlikely that a seller would consider an offer unless it were in writing and accompanied by a mortgage pre-approval letter. Massachusetts offer also typically have a specific expiration date and time.
When a buyer submits a written offer, it will be a binding contract if signed by the seller before the expiration time. At any time before it is accepted by the seller, the buyer may rescind their offer. If the time lapses, then the offer is no longer valid.
Seller’s Counter Offer
A seller may choose not the accept that initial offer, but instead, submit a counteroffer. The buyer’s first offer becomes void; the seller cannot go back and accept it. The seller’s counteroffer is now the only valid offer to be considered. The buyer may choose to accept the counteroffer or submit their own counteroffer.
As a side note, counter-offers made verbally may not be legally binding until in writing and signed by both parties. However, communications made via email and text may be considered “in writing” and may therefore be legally binding. Refer to our blog on “Text Messages Can Be Legally Binding in MA Real Estate Transactions” for additional information on this.
General Rule on MA Real Estate Offers and Counteroffers
In general, once a counteroffer is made, all previous offers become void. Only the current counteroffer is valid. The person making the counteroffer may rescind it at any time before the other party accepts. A party reviewing an offer can also flat out reject an offer or counteroffer (rather than submitting yet another counteroffer). A rejection ends the negotiations, unless a brand new offer is submitted.
Sometimes a buyer or seller may want to go back and accept a previous counteroffer. Unfortunately, old counteroffers are not valid. In the example below, after going back and forth several times, a buyer decides to reject the seller’s most recent counter-offer. This ends the negotiation sequence. The seller in this case cannot come back and say they want to accept the buyer’s last offer of $410,000 since it’s no longer valid. However, the seller can initiate a new offer to the seller for $410,000. It would then be up to the buyer to accept or reject.
- Buyer Offers $400,000
- Seller Counteroffers $420,000
- Buyer Counteroffers $410,000
- Seller Counteroffers $418,000
- Buyer Rejects Counteroffer
Offers Are About More than Price
As a final note, keep in mind that offers contain more than a reference to price. Closing date, deposit amounts, and other terms may be negotiated as well. It’s possible that counter-offers may be submitted for the same price but with different dates or other terms. Any time something is changed in an offer, it essentially creates a counter-offer. Keep this in mind when negotiating MA real estate offers and counteroffers.