A seller in Bend, Oregon receives two written offers simultaneously: Offer A for $450,000 with no contingencies, and Offer B for $460,000 with a financing contingency. The seller signs and returns a counteroffer to Buyer A at $455,000, and without waiting for Buyer A's response, also signs and returns a separate counteroffer to Buyer B at $462,000. Buyer A immediately signs and returns the counteroffer accepting $455,000. Which of the following best describes the situation?
Correct Answer
A) A binding contract exists with Buyer A only, because Buyer A accepted first and the seller cannot issue simultaneous counteroffers.
When a seller issues a counteroffer to Buyer A and Buyer A accepts it before the seller's counteroffer to Buyer B is accepted, a binding contract is formed with Buyer A. However, issuing simultaneous counteroffers to multiple buyers is a serious risk management problem: if both buyers had accepted simultaneously, the seller could be bound to two contracts. In this scenario, Buyer A's acceptance was first and complete, forming the enforceable contract. The seller's counteroffer to Buyer B does not override the already-formed contract with Buyer A. Oregon brokers have a duty to advise sellers of this risk when handling multiple offers.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
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.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
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