As in any market, there are real estate issues that must be resolved before continuing the transaction…especially if the market is hot! Thankfully, a lot of these real estate issues can be addressed according to real estate laws and regulations.
A HOT MARKET CAN CAUSE MULTIPLE-OFFER PROBLEMS (AUGUST 1995)
Texas REALTOR® Dennis R. Schmidt, Associate Counsel, Texas Association of REALTORS® Since the Texas real estate market has improved and competition for property has become more intense, conflicts concerning the offer and acceptance process have increased. Don’t worry, TAR’s new form, called Seller’s Rejection of Offer with Invitation for Submission of New Offer (TAR-093*), can help clarify the process.
WHO CONTROLS WHAT?
NAR Standard of Practice 1-6 states, “REALTORS® shall submit offers and counteroffers objectively and as quickly as possible.” Similarly, MLS rule 2.1 says, “The listing broker must make arrangements to present the offer as soon as possible, or give the cooperating broker a satisfactory reason for not doing so.” It should be remembered, however,—that the seller controls the method, manner and timing of the presentation offers. A buyer may limit the time frame for the seller to consider the buyer’s offer, but a buyer cannot require a seller to take any specific action. In other words, while it might be in the seller’s best interest to promptly consider and respond to a buyer’s offer, a seller has no legal duty to respond to an offer in any particular way. How the-seller and listing agent respond to an offer depends upon many factors. Is the seller out of town? Is the seller only available on weekends? Can the seller be reached by phone or fax? These and other issues need to be considered by the seller and listing agent to determine how and when to present offers to the seller. Common business courtesy and the MLS rule cited above dictate that cooperating brokers be informed of any delays expected in the presentation of offers.
THE LIFE OF AN OFFER
An offer remains open until it is accepted, rejected or withdrawn by the offeror. A seller can accept the offer as presented, reject it or make a counteroffer. A counteroffer by a seller is a rejection of the buyer’s offer and the making of a new offer by the seller. Like any other offer; it remains open until accepted, rejected or withdrawn. Herein lies the source of the problem with counteroffers. If a seller has made a counteroffer and then receives a better offer from another buyer, the seller should first terminate or withdraw the counteroffer before accepting the second offer. The mechanics and timing of the withdrawal of a counteroffer can present practical and legal problems for the seller. Was the counteroffer withdrawn before it was accepted by the first buyer? Will the second buyer keep his offer open while the seller withdraws his counteroffer to the first buyer? In a sellers’ market; where considerable interest in one property can be expected, what should a seller do when he receives an offer that is not acceptable?
AVOID PROBLEMS: USE TAR–093′
In order to avoid the problems noted above, the seller should not make a counteroffer. Instead, the seller could use the form TAR-093 to tell buyer that the offer was considered, it was not acceptable and the buyer might receive favorable consideration if the offer was changed in the manner indicated on the form. TAR-093 makes it clear that the seller is not making a counteroffer. By using this form the seller is free to consider other offers without having to be concerned about the withdrawal of a counteroffer. The form also makes it clear that the seller will continue to market the property and may accept an offer from another buyer. A buyer receiving this form can review the seller’s suggested changes and consider submitting a new offer that might be more acceptable to the seller. The clarity of purpose and intent that this form brings to the negotiation process will greatly reduce offer and acceptance problems.
DOES YES ALWAYS MEAN YES?
Finally, the acceptance of an offer should always be made with care. Verbal assurances by a seller or a seller’s agent should be conveyed to a buyer with some reservations. Since the seller’s signature on the contract is necessary to make it enforceable, buyers should be told that verbal acceptance must be followed by a signed contract in order to complete the process. This will avoid the embarrassment and anger that can result from a buyer relying on a seller’s verbal acceptance only to find out that the seller has changed his mind and has not signed the contract. Wait until you have a signed contract before you start to celebrate.