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 If the time lapses, then the offer is no longer valid.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 The seller in this case cannot come back and say they want to accept the  buyer’s last offer of $410,000 since it’s no longer valid.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.

Example…

• 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.

 

Considering several offers can be a confusing undertaking for sellers. The tendency is to consider just the price, but that can result in issues. There are a variety of different terms in an offer that one may consider to determine the best offer. This article contains an overview of evaluating multiple offers on MA homes for sale

An Overview Of Evaluating Multiple Offers On MA Homes For Sale

Financing Pre-Approvals

A pre-qualification is much different from a pre-approval, particularly when evaluating different offers. Pre-approvals are typically prepared after a mortgage company checks the credit history of a buyer. There is no level of credit check for pre-qualifications. Pre-approved people are, as a result, more likely to get approved for a mortgage. Sellers will lose valuable time when the other party is not able to obtain financing and must therefore cancel the deal. Due to this risk, sellers do not typically rely on pre-qualifications.

Conditions

It is standard for contingencies such as an inspection to be included in an offer. Frequently special terms are included by home buyers, such as a home sale contingency. More conditions mean more risk of the deal falling through. Certain situations are more troublesome than others and might be effected by the activity in the real estate market.

Escrow Deposits

Earnest money demonstrate the seriousness of a home buyer. It also covers a seller when the other person terminating a deal for a reason not related to contingencies. Also, the dollar value of deposits can reflect a buyer’s stability. For the above reasons, the dollar value of deposits can make a difference in situations where there is multiple offers.

More Facts to Consider

Sellers should avoid making price the primary factor in reviewing more than one offer, particularly if closing quickly is a goal. Delays can be expensive and thus can lower the amount of money a seller may realize from the sale. Additionally, a property that comes back on the market after a deal falls through may get sold for less since buyers may assume that something must be wrong with it. A skilled real estate broker can help you carefully evaluate all the specifics of offers and properly compare them. This article with an overview of evaluating multiple offers on MA homes for sale was prepared by Peter DaMore at Law Offices of Peter T. DaMore Jr..