Seller "withdraws" counter offer before written deadline - legal?

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Seller "withdraws" counter offer before written deadline - legal?

Chris Reeves
Investor · Redlands, CA · Member since 2015 · 56 posts · 35 votes

Hey folks,

This situation has not happened to me before so I thought I'd ask to see if anyone else has been through this.

  1. On August 16 I received a seller's counter offer on a property. The written deadline for acceptance on the counter offer was August 19 (which I presume means any time up until 11:59 pm).
  2. In the early afternoon of Friday, August 19 I received a written "withdrawal" of the counter offer from the seller. The withdrawal noted that I had not accepted the counter offer by 2:30 pm central time, and claimed the seller therefore had the right to withdraw (the original counter offer did not mention a time deadline - only the date of August 19).
  3. I e-mailed my real estate agent to ask why the seller had withdrawn the offer. She wrote back that he told her he received a "substantially" higher offer and that the very day he attempted to cancel his counter offer to me 9 hours early, he went into contract with another buyer.

When I received the e-mail containing his written withdrawal of the counter I thought "oh well, that's that" and initially thought I had lost the right to accept his counter offer. I did not realize until today, Monday August 22, when I checked the documents again, that the seller's "withdrawal" of his offer to sell his property was not actually a valid withdrawal - that in fact I had all day August 19 to accept his counter.

It seems clear to me now that the seller was eager to send written notice of withdrawal of his counter offer because he had received a better offer and was chomping at the bit hoping I would not accept by midnight August 19.

My question is - is there anything I can do here? Do I have any grounds to demand the seller perform? I'm going to call a real estate attorney in the morning - just wondering if anyone has been through a similar situation.

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Gregory HillPro Member
Real Estate Broker · Buhl, ID · Member since 2015 · 15 posts · 13 votes
10y

An offer is simply that, and offer to enter into a contract.  If you put an expiration date on it, then the offer expires at a certain time, thus limiting the time the offeree has to accept the offer, in other words it is automatically withdrawn at that date and time.  An offer may be withdrawn at any time before it is accepted.  In order to have a valid contract, there must be both an offer and acceptance.  An offer cannot me accepted once it is withdrawn.  Further, an offer cannot be accepted after it has been rejected.

A counter-offer is a rejection of the original offer, and is a new offer to enter into a contract.  If it has an expiration date, it will automatically expire at that time.  If the offeree wants to accept the counter-offer, he must do so before the expiration.  A counter-offer, just like an offer, may be withdrawn at any time prior to its acceptance.

When the seller signed the offer, it is subject to the attached counter offer, and NO CONTRACT IS FORMED.  So the terms do not revert back to the original offer's terms, because no contract was formed, and you cannot sue as Jason Hirko suggested.  Further, just because there is an expiration date does not make it 'yours to sign' until the expiration, it is only 'yours to sign' until either the expiration or its withdrawal, whichever occurs first.

As Jay Hinrichs pointed out, sign as soon as you decide the terms are acceptable.

Finally Chris, what you were describing, that you had until a certain time to sign the contract, would be more of an option contract, i.e., the offer would be held open for a certain period of time, and you could enter into the contract at your option.  An option must be supported by consideration, in other words you have to put something into the deal, just to get the option.

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  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    10y

    Were you under contract and renegotiating? If not, the seller can pretty much do whatever they want. I've almost gotten to the point where I ignore such deadlines. 

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  • Derek Wilson
    Real Estate Agent · Winston-Salem, NC · Member since 2016 · 7 posts · 9 votes
    10y

    The deadline is just to pressure you to make a decision. Until both parties have signed the offer it is not a contract and the offering party may cancel the offer at anytime before the contract is formed.

    3Reply
  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    10y

    Pretty sure you can withdraw any sort of offer/counteroffer at any time since at that point there has been no agreement made and signed by all parties.

    0Reply
  • Chris Reeves
    OP
    Investor · Redlands, CA · Member since 2015 · 56 posts · 35 votes
    10y

    Ah, well thanks. Stupid question then - I thought offers to sell were in fact legally binding. "I agree to sell you X for Y and this agreement in force for Z days."

    0Reply
  • Chris Reeves
    OP
    Investor · Redlands, CA · Member since 2015 · 56 posts · 35 votes
    10y

    John Anderson - you have no idea what the offer was actually - it was in fact exactly what the real estate agent recommended, not a low ball at all. And yes I will of course move on.

    0Reply
  • Levi T.Pro Member
    Rental Property Investor · Tucson AZ / Nice FR / Washington DC · Member since 2016 · 1k+ posts · 1k+ votes
    10y
    Originally posted by @Chris Reeves:

    Ah, well thanks. Stupid question then - I thought offers to sell were in fact legally binding. "I agree to sell you X for Y and this agreement in force for Z days."

    The cost to even enforce it, if it was a binding agreement, is normally not worth the headache. Judge would likely give you some compensational loss, but you would never get the property. Sucks, but is what it is!

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  • William Hochstedler
    Broker · Logan, UT · Member since 2013 · 1k+ posts · 1k+ votes
    10y

    It's not a binding contract until there is a "meeting of the minds".  You said one price in your offer.   The seller said another price in their counter.  Until you signed the counter (and gave notice that it was accepted), you have no enforceable agreement.  Either party can withdraw their offer/counter offer prior to execution.

    This happens pretty often in competitive markets and is always a bummer.

    1Reply
  • Jason Hirko
    Lender · San Antonio, TX · Member since 2016 · 1k+ posts · 1k+ votes
    10y

    @Chris Reeves if you sent him a written offer, with your signature, and he sent it back, signed with new terms, specifically the higher price and a time deadline, you absolutely had the rights to that up until the end of August 19th. The people on here that are saying you just made a low ball offer and should move on seem to be ignoring the fact that you said you had a written counter offer with a time deadline - that means that it is yours to sign until the end of that period and effectively be under contract if you don't change any terms whatsoever. However, since you didn't sign it before the deadline, that option has passed. I think the only thing you could do at this point, since you didn't sign in time, would be to sue the seller for compensation for withdrawing the offer before the deadline, but I doubt very highly you could get a judgement for specific performance relating to him selling you the property

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Chris Reeves  I think what your thinking about is this.

    seller list property you offer full price all cash no contingencies.. seller rejects.. there is a mechanism for the listing agent to get paid.. buyer still does not get the property but the listing agent and maybe the other agent can sue for their commission because they brought in a ready willing and able buyer according to the listing agreement.... I see this talked about in CE class. but in practice never going to happen.

    as stated above.. until you have all signatures offer counter offer, Acknowledgment of counter offer. you have no contract... you simply have an offer.

    And it sound like you went in at a price YOUR agent recommended so it was not full price..

    so there you go... most important word in Real Estate is NEXT.  deals are like street cars there is one on every corner...

    you are now wiser as well.. you now know if you want something just because they gave you a few days to respond .. sign the contract ASAP... you always have your due diligence to get out no big risk in signing the counter offer to purchase unless there is no contingencies and your putting up some substantial EM like 20 to 50k or so..

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  • Gregory HillPro Member
    Real Estate Broker · Buhl, ID · Member since 2015 · 15 posts · 13 votes
    10y

    An offer is simply that, and offer to enter into a contract.  If you put an expiration date on it, then the offer expires at a certain time, thus limiting the time the offeree has to accept the offer, in other words it is automatically withdrawn at that date and time.  An offer may be withdrawn at any time before it is accepted.  In order to have a valid contract, there must be both an offer and acceptance.  An offer cannot me accepted once it is withdrawn.  Further, an offer cannot be accepted after it has been rejected.

    A counter-offer is a rejection of the original offer, and is a new offer to enter into a contract.  If it has an expiration date, it will automatically expire at that time.  If the offeree wants to accept the counter-offer, he must do so before the expiration.  A counter-offer, just like an offer, may be withdrawn at any time prior to its acceptance.

    When the seller signed the offer, it is subject to the attached counter offer, and NO CONTRACT IS FORMED.  So the terms do not revert back to the original offer's terms, because no contract was formed, and you cannot sue as Jason Hirko suggested.  Further, just because there is an expiration date does not make it 'yours to sign' until the expiration, it is only 'yours to sign' until either the expiration or its withdrawal, whichever occurs first.

    As Jay Hinrichs pointed out, sign as soon as you decide the terms are acceptable.

    Finally Chris, what you were describing, that you had until a certain time to sign the contract, would be more of an option contract, i.e., the offer would be held open for a certain period of time, and you could enter into the contract at your option.  An option must be supported by consideration, in other words you have to put something into the deal, just to get the option.

    5Reply
  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    10y

    @Gregory Hill  Good summary of Contracts, and as stated, an offer is Not A Contract.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Jason Hirko  when presented with a counter offer there is no contract until the buyer signs it and the seller acknowledges it.. so nothing binding on either party..

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Jason Hirko  although I see your in Texas.. I see these 100 dollar options.. all the time. and if you have a 100 option then you are in contract until your option period expries.. which in Texas from what I see is basically the due diligence period.. it is two different things. than what the OP presented.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    10y

    @Jason Hirko Absolutely not correct.  Any offer may be withdrawn, prior to acceptance by the other party.  Just like any counter offer is a legal rejection of any offer.

    1Reply
  • Chris Reeves
    OP
    Investor · Redlands, CA · Member since 2015 · 56 posts · 35 votes
    10y

    Great replies and mini-education all. Appreciate it.

    0Reply
  • Jason Hirko
    Lender · San Antonio, TX · Member since 2016 · 1k+ posts · 1k+ votes
    10y
    Originally posted by @Jay Hinrichs:

    @Jason Hirko  although I see your in Texas.. I see these 100 dollar options.. all the time. and if you have a 100 option then you are in contract until your option period expries.. which in Texas from what I see is basically the due diligence period.. it is two different things. than what the OP presented.

     Fair enough - I concede that to you! However, if he has a counter offer, signed by the seller, and if he had signed it on Friday, both parties would have signed and he would have had a valid contract, right? 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Jason Hirko  yes however in the states I work in primarily OR CA  the seller can withdraw any SECOND up until its signed.. the onus is on the buyer in this situation.  not the seller.  and yes if the buyer wanted this property.. the second they got the counter and if it was acceptable they should have signed it.. then get it acknowledged and then they are in escrow... if they wanted out I am sure there was a due diligence period.. this is the type of mistake folks only make once its a learning curve however the buyers agent should have told the buyer they risk losing it by sitting on the contract to the very last second.

    this is why in hot markets you see sellers and buyers make offers with ONLY hours to repond..

    offer comes in at 1pm and they require a response by 5pm..

    giving days to respond is nice but it does set you up for what exactly happened

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  • Brent Coombs
    Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
    10y

    "oh well, that's that"...

    0Reply
  • Dawn BrenengenBusiness Member
    Moderator
    Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes
    10y

    @Jason Hirko Not quite.  The buyer would have to sign and deliver acceptance to the seller.  So even if he signed it, if he didn't deliver acceptance to the seller before the seller withdrew, then he would still not have a contract.  

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  • Brent Coombs
    Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
    10y

    @Dawn Brenengen, (edit: oops, I thought you were responding to my OP quote). But I'll add this:

    Keep checking! If the new Buyer reneges, that might put the OP into a better bargaining position!

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  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    10y

    Ding ding ding. Correct answer @Dawn Brenengen

    Must be signed and returned accepted to other party. Offers and counter offers are just that. Until signed and accepted seller or buyer have no obligation.

    As to dates and deadlines, I had a seller accept my offer weeks after expiration. We did the deal. Legally I could have refused.

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