Does a Highest & Best Letter Cancel Existing Counter-Offers

Question

I made an offer on a bank owned home.  The bank counter offered on a Monday with no expiration on the offer.  The same week they requested highest and best offers on Thursday.  I attempted to accept the counter offer from the bank to purchase the property on Friday and was told the counter-offer was no longer valid.  Is that acceptable?

J Scott · Answer

REO counter offers are rarely made on an official contract (and aren't signed), so there is nothing legally binding by a bank counter-offer. That said, banks are generally pretty good about adhering to a counter-offer if you accept it prior to them getting another offer or asking for H&B.

Had you accepted the counter within the first 48 hours or so, my guess is that you would have gotten the property under those terms. Why did you wait a week to accept?

Had you accepted the counter within the first 48 hours or so, my guess is that you would have gotten the property under those terms.  Why did you wait a week to accept?

Steve Babiak · Answer

J  Scott - here is some language extracted from one addendum.

That is exactly as it was written, except for where I have "sic" to correct a typo that was in their addendum.

Will Barnard · Answer

Every single bank REO addendum has similar version that I have dealt with as well. I hate signing it, but if you don't, you can't buy their property. That said, I have yet to have them try and cancel it (knock on wood) and I don't think they put that in there just to back out in case a better offer comes along, it is for other reasons.

J Fox · Answer

Thank you for all the feedback.  It sounds like I don't really have an argument to force them to accept my acceptance.

Steve Babiak · Answer

J  Scott - that was a Freddie.  WaMu, assigned to JP Morgan Chase.

That Paragraph 26 is a doozy and the Bii part probably is why all-cash rules.

Jeff S. · Answer

Counter-offers are revocable at any time because they are not a contract since it takes all parties signatures for it to be a contract. Once a counter is signed by the buyer and acknowledged it is binding.

J Scott · Answer

Steve -

Thanks for posting that!  What bank was that...was that FNMA?

I guess I need to read my contracts more thoroughly!!!

J Scott · Answer

I've heard others say this as well, but I've never seen this language in an REO addendum.  There is language that says that until the contract is binding (signed and received by all parties), the bank can change their mind, but once the contract is signed, I've never seen anything giving the bank the right to terminate the contract without buyer default.

Ryan M. · Answer

I prefer to work with the LA on these and have good luck with them holding other offers and keep me under contract because they know it will work with future deals for both of us.

Steve Babiak · Answer

Even worse, the addendum that the banks use sometime includes language that lets them out of the contract with no penalty.  Some suspect they do that just in case a better offer comes along later than what they initially accepted with yours.

Does a Highest & Best Letter Cancel Existing Counter-Offers

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