NEGOTIATING AN OFFER - The Seller's Perspective

(Excerpts from the legal office of the Greater Boston Real Estate Board)

Buyers Expectations:

Regardless of the offer price, buyers should not expect acceptance.  Even if a buyer submits a full-price offer with no contingencies, the seller is not under a duty to accept the offer.

The seller, in putting a property on the market, is making a general solicitation for offers from prospective buyers.  Although a seller may suggest a sale price and other terms that may be acceptable, the seller is merely suggesting terms upon which he/she may enter into a future contract.  The solicitation does not rise to the level specificity to constitute an offer that would allow acceptance by the buyer.

It is the buyer who makes the offer specific enough to allow acceptance and contract.  In fact, the title of the GBREB form, “Offer to Purchase Real Estate” serves as notice to any buyer as to their exact role in the transaction.

Negotiations:

Buyers neither have a right to counter-offer nor is the seller required to negotiate.  When an offer is submitted, a seller is free to accept, reject or negotiate.  Nothing obligates the seller to respond, let alone give a counter-offer or engage the buyer in negotiation.

Realtors acting as listing brokers have a duty to treat all customers fairly, and should not favor one buyer over another by disclosing the terms of another buyer’s offer.  All buyers should know when there are multiple offers on the property.  Buyers should also be aware that there is no duty (on the seller’s part) to negotiate with buyers in the order of offer presentation.  The seller is free to negotiate with any buyer or they may simply accept the “best and highest offer” from the offers submitted.

Counter-Offers:

The Statute of Frauds requires that contracts for the sale of real estate be in writing to be enforceable.  As a result, there is a world of difference for a seller in terms of their bargaining position when they choose to engage oral negotiation versus the decision to employ a written counter offer.

Negotiation and Invitation:

During the negotiation process, it is not uncommon for a seller to orally reject a written offer and invite the buyer to resubmit the offer on more favorable terms.  Although brokers, salespeople and buyers and sellers will often say the seller “countered,” because of the writing requirement of the Statute of Frauds, the oral “counter” is a form of negotiation.  It is not a true counter offer and does not put the buyer in a position to “accept.”  All the buyer can do is resubmit another offer, on the terms suggested by the seller and await acceptance by the seller.

Another Offer Comes In:

When the seller avoids a written counter offer, the seller still has the authority to accept any offer that comes in.  Despite negotiations with buyer # 1, and even a statement that if the buyer resubmits of given terms, the seller will accept their offer, the seller is not bound in contract to buyer # 1.  If a second offer comes in, the seller is free to negotiate with that buyer or accept that offer outright if the terms are acceptable.

Written Counter Offer/Role Reversal:

If on the other hand the seller has employed a written counter offer then the seller is NOT free to accept the second offer.  By giving a written counter offer to the buyer, the seller has bestowed the power of acceptance upon the buyer and must contact the first buyer and revoke the offer.  Once the written counter offer has been revoked, the seller has assumed their original role and is again free to negotiate with any buyer they choose.  If the buyer has already accepted the offer prior to revocation, the seller is bound to buyer #1.

Counter All or One:

If a seller is orally negotiating in a multiple offer situation, the seller is free to reject all offers and invite all buyers to resubmit on his/her terms.  Even if all the potential buyers resubmit offers on the terms requested or better, the seller is still in the position of accepting the offer that most appeals to him/her.  If the seller chooses to engage in a written counter offer, he/she may only do this with ONE buyer at a time.  To give more than one written counter offer would expose the seller to the liability of selling the same property more than once.

ORAL negotiation allows the seller to take on all corners.  WRITTEN counter offers require the seller to seek acceptance of revocation before entertaining and submitting further counter offers or accepting any offer that comes in.