An offer is a promise to act or refrain from acting, made by the offeror to the offeree, that is definite enough to be enforceable. The offer must be communicated to the offeree and remain open until it is accepted, rejected, countered, revoked, or expires. Acceptance must mirror the exact terms of the offer — this is known as the mirror image rule. Any change to the terms constitutes a counteroffer, not an acceptance, and terminates the original offer.
A buyer offers $300,000 for a home with a 45-day closing. The seller agrees to all terms and signs the offer without changes. At that moment, mutual assent is achieved and a binding contract is formed.
The exam frequently tests the mirror image rule: if the seller changes even one term, it becomes a counteroffer and the original offer is dead. Remember that an offer can be revoked anytime before acceptance is communicated, even if the offeror promised to keep it open, unless it is an option contract. Know that silence does not constitute acceptance.
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.
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
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
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