by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com). Join us on Facebook and Google+.
“I’m selling my home. The buyer made an offer that I countered at a higher price, but then I changed my mind and took the original offer. But the buyer walked away and made an offer on another house. Is that breach of contract?”
I saw this question on an online forum the other day and I thought I’d answer it here. I’m not an attorney so don’t take the answer as legal advice. The following is just my opinion based on contract and core law continuing ed classes I’ve taken…
There is No Contract
A counter offer becomes a new offer.
Let me explain.
It is my understanding that to have a contract you first have to have a “meeting of the minds.” In other words, both sides have to agree to the same offer at the same time. And for that offer to be enforceable it has to be in writing and signed.
When you countered the buyer’s original offer with a higher price, you effectively killed the buyer’s original offer. Your counter offer actually became a new offer, which the buyer was free to accept, decline, counter or ignore.
And then when you went back and said you would take the buyer’s original offer, that became another new offer (killing your original counter offer to the buyer, by the way).
And since the buyer was free to go anyway, the buyer went out and found another place to live.
The upshot to this is that once you decide to counter an offer on any single point, and then communicate it, it becomes a new offer and the other side is free to walk.
Hashing It Out
Sometimes there are a lot of points in conflict in a real estate offer: the price, the closing date, personal items, repairs…it goes on and on. When a bunch of multiple conflicts come up Realtors usually get on the phone and hash them all out at once.
In the example above I might get on the phone and tell the other Realtor, “Okay, we can do X for the price and we’ll go as-is on the repairs, but we need X for the closing date and we need a seller contribution of X for closing costs.”
And then the other Realtor calls her seller, and then calls me back, saying something like, “Okay we’ll do the as-is, they don’t like the closing date but they’ll live with it, and they’ll do the closing costs but we need to raise the price by X to do that.”
And then I get back on the phone with the buyers, see if they can live with those terms, and then I finally call the seller’s agent back and say, “It looks like they’re good with it, I’ll write it up and send it over.”
Then, once both parties sign the written agreement that was originally hashed out over the phone, it’s my understanding that only at that point only do we have an enforceable contract.
And, my guess is that when we go back and forth like this over the phone, each back-and-forth is an offer and counter offer.
Enforceable
I’ve used the word “enforceable” twice now.
As I understand it, contracts in Florida can be done verbally, but verbal contracts can’t be enforced. So Charlie might agree to sell you a home in a handshake deal, but if Charlie backs out a court won’t enforce it because it’s not in writing.
If a buyer writes you an offer on your home and you verbally counter it, it is my understanding, however, that even though the counter isn’t in writing it still effectively kills the original deal, because it’s a new offer.
The way I try and handle this situation is to, if at all possible, put it in writing anyway.
In other words, if you verbally tell me to counter on a certain point, I will do it verbally with the other agent, but I will also put it in writing as an email or fax back to you and to the other agent just so that the record will reflect that the counter was done in writing, and so that the record also reflects it was put back in writing to you just in case I didn’t hear it correctly.
I hope this sheds some light on the subject and I would love to hear your comments!
Hire St. Augustine Team Realty when you make an offer. Email ReQuestion@StAugTeam.com or call Broker Sean Hess at (904) 386-8327.
