Multiple Counter Offer

Counteroffers In Real Estate Sales

In Silicon Valley, multiple offers to purchase a home are often received within a short time period. A seller cannot respond to multiple offers by sending a simple counteroffer to each potential buyer. More than one buyer could accept the counteroffer giving each buyer a valid contract, but the seller would not be able to sell the property to more than one of them. The seller would be in breach of one or more valid contracts.

If the seller wishes to respond to several offers simultaneously, the seller needs to make a "multiple counter offer". The seller may choose to send a "multiple counter offer" to some or all of the potential buyers.

Multiple offers have been so common that many agents representing home sellers, announce that they will listen to offers on a specified date. This use of an "offer date" has in turn made preemptive offers more common.

Definition of Counteroffer

A counteroffer is a rejection of the original offer and the simultaneous making of a new offer. An important point is that making a counteroffer rejects the original offer. A counteroffer cannot be made, with the intention of accepting the original offer if the counteroffer is not accepted. A counteroffer can be made be either the seller or a buyer.

Definition of Multiple Counter Offer

When a home seller receives multiple offers to buy his home, rather than accepting the best offer, the seller may decide to send a counteroffer or a multiple counter offer as a response. If more than one purchase offer is countered, the counter is a multiple counter offer and it is different from a counteroffer made to a single offer. Both CAR and PRDS have standard forms that are used by sellers to make a multiple counter offer.

Responding to a Multiple Counter Offer

If the seller either receives one or more responses to a multiple counter offer (either accepting it, or in turn countering it), the seller must accept and sign one response in order to make the contract ratified. If a buyer simply accepts the multiple counter offer, that does not mean the buyer has a valid contract. The seller has to accept the buyer's acceptance of the multiple counter offer. (Two buyers could accept the multiple counter offer but the property can only be sold to one.)

Once the purchase contract has been signed by both seller and buyer, neither can arbitrarily decide to cancel it. However, until the multiple counter offer is ratified by both buyer and seller, the seller can even accept an offer which is not from anyone the multiple counter offer was sent to.

Although a buyer may feel frustrated by being asked to revise his offer, the competing buyers may feel the same way and not respond to the multiple counter offer.

Responding to Multiple Offers

Replying to multiple offers with a multiple counter offer pushes the sale towards a completion in a short amount of time but doesn't guarantee any end date for the sale process. The seller's agent may instead decide to talk to the agents of several of the buyers who submitted offers before or instead of sending a multiple counter offer.

There are advantages and risks to either approach. Sending a multiple counter offer cancels the offers which were originally sent. However, the multiple counter offer clearly announces that several offers are being considered. The buyers may be motivated to improve their offer, they may decide to resubmit their original offer, or they may decide that they don't want to get in a bidding war and not respond.

If the seller's agent talks to several of the agents representing buyers, the seller's agent can make a more educated guess about how to proceed. Rarely, if ever at all, would a seller's agent talk directly with a buyer who has submitted an offer, because there would be issues of implied agency and dual agency.

The experience and skill of the agents involved can dramatically affect the outcome.

A Multiple Counter Offer May Have Different Terms For Each Buyer

Just as each of the purchase offers submitted probably have different terms and prices, the multiple counter offer may have different terms and prices for each of the offers. The seller may like the contingencies (or lack of contingencies) in one of the offers, but not the price. Conversely the seller may like the price but not the contingencies. Even though it is a simultaneous offer made to several potential buyers, responding with different terms makes each buyer more likely to accept the multiple counter offer.

One seller strategy is to respond with different multiple counter offer terms, trying to get the best terms while also trying to play it relatively safe. The seller could respond to one of the offers with changes which would probably be accepted and reply to other offers trying to get more and more.

Another seller strategy may come from considering the apparent attitude of the buyer's agent and buyer. If the seller and the seller's agent "feel good" about an offer, the buyer, and the agent representing the buyer, they are more likely to make concessions. However, if a less liked buyer offers enough, they will accept his offer.

Alternatively, the seller and the seller's agent may simply believe the first buyer to accept the multiple counter offer is the one who is most committed and confident they can meet all of the purchase contract conditions and intend to ratify that one.

A listing agent who wants to double end the sale in a multiple offer situation would be in an almost impossible situation if one or more of the offers specify that the offer cannot be disclosed to competing buyers without invalidating that offer. A buyer who does not want to get in a bidding war may decide to put such a condition in their purchase offer.

Since a multiple counter offer can have different terms for each buyer, it gives each buyer insight into the concerns the seller has about his offer. A buyer shouldn't simply respond with more money. The experience and skill of the agents involved can dramatically affect the outcome.