A buyer makes a written offer to purchase a property for $350,000. The seller receives the offer and responds with a counteroffer, proposing a price of $360,000 and different closing costs. Before the buyer has a chance to respond to the counteroffer, the seller receives a full-price, all-cash offer from another party and decides to accept it. What is the status of the first buyer's original offer and the seller's counteroffer?
- ABoth the first buyer's original offer and the seller's counteroffer are automatically terminated.
- BThe seller is legally obligated to wait for the first buyer's response to the counteroffer before accepting another offer.
- CThe seller's acceptance of the second offer automatically revokes the first buyer's original offer, but the counteroffer remains open.
- DThe first buyer's original offer is still valid, and they can accept it if they choose.
Show answer & explanationAnswer & explanation
Correct answer: A. Both the first buyer's original offer and the seller's counteroffer are automatically terminated.
A counteroffer acts as a rejection of the original offer and creates a new offer. Once a counteroffer is made, the original offer is terminated. Additionally, an offer (or counteroffer) can be revoked by the offeror at any time before it is accepted, provided proper notice is given. By accepting a different offer, the seller effectively revokes their counteroffer and terminates the first buyer's original offer.
Why the other options are wrong
- B. The seller is not obligated to wait for a response to a counteroffer; they can revoke it before acceptance.
- C. A counteroffer terminates the original offer; the original offer does not remain open.
- D. The first buyer's original offer was terminated by the seller's counteroffer.
Counteroffer Effect
A counteroffer is a response to an offer that changes its terms. It acts as both a rejection of the original offer and a new offer. This means the original offer is terminated and cannot be accepted later.
- Rejects original offer
- Creates a new offer
- Terminates original offer
Memory trick: Countering an offer sends the first one to the graveyard.