Counteroffer
Definition
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.
Example
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
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 Contracts Terms
Purchase Agreement / Sales Contract
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
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
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 Deposit
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
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.
Inspection Contingency
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
Frequently Asked Questions
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