When a seller receives a buyer's offer and changes any term — price, closing date, contingencies, or inclusions — the seller has made a counteroffer. The original offer is automatically terminated and cannot be accepted later, even by the original offeror. The buyer then has the choice to accept, reject, or counter the counteroffer. There is no limit to the number of counteroffers that can go back and forth between parties, but each new counteroffer kills the previous one.
A buyer offers $400,000 for a property. The seller likes the terms but changes the price to $415,000. This counteroffer terminates the buyer's original $400,000 offer. If the buyer rejects the $415,000 counteroffer, the buyer cannot later go back and accept the seller's $415,000 or revive the original $400,000 offer.
Exam tip: once a counteroffer is made, the original offer is dead and cannot be revived. A common trick question asks whether the original offeror can go back and accept the first offer after making a counteroffer — the answer is no. Remember that every counteroffer flips the roles of offeror and offeree.
Related Terms
Related Concepts
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
Frequently Asked Questions
Study This in Your State
Counteroffer may have state-specific rules. Choose your state to study Contracts with localized content: