I agree that the Counter Offer IS NOT separate â€“ it is an integral part of the contract. The original purchase agreement is made â€œSUBJECT TOâ€ a subsequent Counter Offer â€“ just as any Counter Offer would be made subject to any subsequent counter offer or addendum that follows. It is for this reason that the original offer is NOT to be changed by writing in changes or altering in any way. Any changes in contract terms must be specified on subsequent documents that become a part of the contract â€œtrail of documents.â€
ALL documents in the trail of documents must be signed and dated even if any specific document has terms that are different from any subsequent document that follows.
In terms of the question my first reaction was neither. It most cases the counter offer is "made part of" the purchase contract. When a offer is given to a seller from a buyer they review the offer and if they do not except all terms they want to counter. The counter is to say I agree with those terms of the purchase offer except these items. Usually foremost is price.
Then the buyer can except those items, saying I except all those items on the purchase contract and your counter one or make a counter two. This can go back and forth as many times needed until both buyer and seller agree. In order to say to stay in contract the Realtors need to make sure all parties involved are adhering to the time frames on the contracts as well.
All terms on the counters and purchase agreement are incorporated into one agreement to open escrow. The escrow officer will then create escrow instructions according to the purchase contract and all counter offers involved. The escrow officer will send out those instructions for everyone to sign again.
There is one exception to this rule and that is foreclosures. Many foreclosures are run by asset manager companies that are outside the state of California. Sometimes they like to make their own contracts that can blanket the country.
You have to be very careful when purchasing a foreclosure and should be using a experienced full time Realtor. There are some banks that send a "counter" which reads at the top that it does "Supersede" the California purchase contract.
If you are purchasing a foreclosure and sign one of those contracts where it states "Supersedes" everything in place on that contract becomes the newagreement and you may loose rights here in California that are written into the California purchase agreement to protect you. If you are signing one of those contracts make sure you read it in detail and have a Realtor, Attorney, or both advising you on the contract.
Yes, I believe that we can answer global questions about real estate on Trulia.com no matter where we are. Consumers who are not licensed and are not professionals are able to express their opinions. I would like to believe that a trained and experienced professional is able to provide quality, correct answers (opinions) that are of value in response to many of the questions posted on this forum.
When it comes to state specific questions, all bets are off!
I suggest to those who ask legal questions that they speak to an attorney. I suggest to those who ask insurance questions that they speak to an insurance professional. I see on Trulia that many others do likewise.
Questions that are specific to a state are questions that I often skip because of my lack of knowledge in regard to the real estate customs and laws in that geographic area.
BTW: Most California agents do use standard forms which are, in the main, fill-in-the-blank forms. These forms have been written by attorneys and using these forms correctly brings with them the blessing of our brokers and E&O insurance providers. Many of the forms have stood the ultimate test of court review.
The Counter Offer form that is used starts out with reference to the original Purchase Agreement (offer), the property, and the parties involved. The very next line is:
â€œ1. TERMS: The terms and conditions of the above referenced document are accepted SUBJECT TO THE FOLLOWING:â€
The quotation marks are mine. The emphasis (caps) is not. The emphasis is directly from the contract document.
I think that makes it clear that Shanna Rogersâ€™ answer â€“ way at the beginning of the string â€“ is correct. TU to you Shanna.
TU â€“ for stating â€œYes, Brian.â€
Please don't include me in your list of fans.
You state: "So your telling me that in Cali, that As a buyer I must first sign a contract that says 500,000 in order for me to counter at 450,000? Gotcha. So in other words, you want your buyers to give you an autograph on a contract they don't agree on."
YES! Finally. You understand. Thank you. Finally.
The only part you missed was the fact that the seller checks a box on page 8, Section 30 that states, (if checked) "SUBJECT TO ATTACHED COUNTER OFFER (C.A.R. Form CO) DATED:XX/XX/XX"
Seller then submits the signed offer AND the Counter Offer #1 (signed by the seller) back to the buyer. Everyone knows, by looking at Section 30 of the signed offer, that, in the event that Counter Offer #1 "blows away" - there is no contract until it is â€œfoundâ€ and signed by the buyer. Who can then exercise their right to sign the Counter Offer #1, at which point weâ€™ll be done, OR they can check the box which states (if checked) "SUBJECT TO ATTACHED COUNTER OFFERâ€ and then submit their Counter Offer #2 along with the fully signed Counter offer #1 â€¦
And so on.
SURELY we must be done with this by now â€¦
You state, â€œIt is important to make certain that all parties are clear as to the final terms so you may want your Realtor to put an addendum on the final contract prior to signing with all of the final requests and changes. Have all parties sign that Addendum and make it part of the final signed agreement.â€
We never do that here. Regardless of how many counter offers there are, we simply back our way through them. If we need to clarify an item AFTER we have a contract and are in escrow, THEN we use an Addendum to address that specific item.
We write offers using an 8-page form called â€œCalifornia Residential Purchase Agreement and Joint Escrow Instructionsâ€ â€“ once it AND all subsequent counter offers are signed and the final document is acknowledged, then we have a set of documents called a â€œPurchase Agreementâ€. When we produce an additional counter to the offer, we always check the box on the last document that states â€œSUBJECT TO the Counter Offer dated ??/??/??.
You state, â€œThats like saying to your future bride at your wedding. "I do......as long as you lose 10 pounds."
NOT. Itâ€™s more like buying a car and saying â€œIf you drop the price, throw in an extra spare tire and a free extended warranty, then you got a deal.â€ Only difference is, when haggling for a car, you do it verbally until you agree. Then you write it up. When it comes to a house, you do it in writing from the start and every single piece of paper represents the next part of an ongoing dialogue.
In California, a purchase agreement is 8 pages long. Every line and paragraph in those 8 pages delineates a specific part of the contract. Without this 8 page document, THERE IS NO CONTRACT. In contrast, a counter offer here in California is a 1 page document and can contain as little as 3 words â€¦ (eg. Price is XXX,XXX.XX).
There is no way 3 words are going to replace an 8 page document. In fact, the 8 page purchase agreement is still in effect and is part of the contract â€“ the counter offer example in this case changes only one line of the original 8 page offer. Therefore, the existing 8 page offer is still a part of the contract, and any subsequent counter offers only change, modify or delineate specific parts of the original purchase agreement. In fact, the boilerplate text at the top of a Counter Offer form references the preceding document (the 8 page offer) by stating, â€œThe terms and conditions of the above referenced document [the 8 page offer] are accepted subject to the following:â€
A counter offer in California DOES NOT replace the original offer â€“ it adds to it. Any terms stated in the counter supersede ONLY THOSE SPECIFIC TERMS of the original offer specifically mentioned in the counter offer.
Scottsdale Realtor / Former Attorney
As Steve, Carl and Shanna mentioned below a counter offer is NOT separate. It must also be pointed out that a counter offer does NOT completely nullify the original purchase agreement. When a counter offer is made only the items listed in the counter offer are being proposed to change. All other terms of the purchase agreement are valid and therefore unchanged. I must also stress to the out of state Agents on this thread to be very carefull answering questions that are very market specific. Correct answers were not given and that could harm the person asking the question and bring alot of problems back your way later on. Good luck to you Daniela!
Sometimes a â€œstep-by-stepâ€ example is helpful. Assume the following transpires between a Seller and a Buyer (via their respective RealtorsÂ®):
1) Seller receives an offer from a Buyer in the amount of $250K with standard contingency timelines.
2) Seller signs the offer; however, Seller also checks the "Subject to" box and submits a signed Counter Offer #1 (CO#1). Both the offer and CO#1 sent back to the Buyer.
3) Buyer receives the signed offer and CO#1, which states "The Inspection Contingency period shall be reduced to 10 days and Sale Price shall be $265K."
4) Buyer signs CO#1 "subject to" along with a new CO#2, which states "Sales price shall be $255K". Both Counter Offers are returned to the Seller.
5) Seller sees CO#1 is signed "subject to" CO#2, reviews CO#2, and then decides to sign CO#2.
6) Buyer receives the signed CO#2.
Once the Buyer/Buyerâ€™s Agent receives the Seller-signed CO#2 a ratified binding contract is established.
So, as the example shows, a Counter Offer is not separate AND it can change or supersede any of the terms as stated in the original purchase agreement and/or previous counter offers until complete agreement is reached between the parties.
In the case above, the inspection contingency timeline was shortened to 10 days and the sale price was increased by $5K.
A counteroffer is not separate - it is changing the purchase agreement. If the purchase contract was signed by all parites with the "subject to attached counter offer" box checked (page 8 of the purchase contract), then it is changing the items on the purchase contract to the items on the counteroffer. If the counteroffer is not signed by all parties, the purchase agreement is then "dead". Whoever receives the counteroffer can sign it as is (agreeing to all changes), do a counteroffer to the counteroffer, or reject the counteroffer. Keep in mind if the counteroffer is rejected, the deal is "dead".
If you have further questions, please feel free to contact me.
He said â€œ.53â€
I replied, â€œCan I make you a counter offer?â€
â€œPut it in writing.â€ he responded.
Little does he know I track these things and realize they were a good price compared to how much they are in California. So I traded him a house for a half a million pounds of bananas.
We protect against blowaways by noting on the cover page of the original offer sheet / purchase & sale agreement that a counter-offer addendum is included in the contract.
Louis, our inspection contingency is a walk-away, and it provides for three steps to resolution. At the first step, the buyer can either accept, walk away, or make a proposal to the Seller. The Seller can then accept, reject, or propose alternative solutions. Finally, the buyer can either accept or walk away. All this time, they are in an executory contract, and the Seller can't bump them out of first position.
Let's write some up today, shall we?!!
An offer is a contract when it is signed by both parties and accompanied by a good faith deposit. Yet in massachusetts the offer is subject to a purchase and sales agreement that goes into spelling out obligations in greater detail of each party. If the parties can't agree to theterms of the purchase and sales agreement, the transaction will not proceed and the good faith deposit returned, hopefully without the shotgun.
There is no such thing as a "universal definition of a counter offer in California. In California the Residential Purchase Agreement is the contract. Any and all subsequent counter offers become a part of the purchase agreement. They do not supercede the purchase agreement. For a counter offer to be issued in the State of California you have a signed purchase agreement by both Buyer & Seller. When the Seller signs the purchase agreement even subject to an attached counter offer, they are accepting the prospective Buyer's offer, they agree to sell the property on the terms and conditions of the offer to the prospective Buyer, and they agree to the stated agency relationships within the offer. The California counter offer is a single page form. At the top of the form you designate that you're making a counter offer to the california residential purchase agreement. It also notes under TERMS: that the terms and conditions of the above referenced purchase agreement are accepted subject to the following. This is when the person proposes their specific change regarding terms. Once both Buyer and Seller have signed the counter offer under acceptence then the purchase agreement and all subsequent counter offers constitutes a contract. Once Escrow has opened Joint Escrow Instructions are issued to both Buyer & Seller. The Joint Escrow Instructions are the purchase agreement and all subsequent counter offers listed in a single more simplified document. Both Buyer and Seller must initial and sign that they have been given a copy of the document, and that all terms and conditions are accepted.
Brian, I'm confident that you know the New Jersey Real Estate business. However, that clearly does not translate to knowing or understanding the real estate business in California. Clearly you do not understand California real estate contracts and should not be giving advice to prospective Buyers and Seller's in California. Stick with practicing the real estate business in New Jersey where you're licensed and have an understanding of New Jersey real estate contracts. Good luck in the future!
Lets clear the air on this. Let me start off by defining an offer. An offer is a presentation of an idea for acceptance or rejection. An offer can consist of 1 component or many components. An offer in real estate generally consists of many components. There are 3 things that can happen with an offer. You can reject an offer, accept the offer OR place a counteroffer on the table. Keep in mind that a counteroffer can and many times will contain many similar components to a previous offer however a counteroffer is in fact a rejection of the original offer placing a new offer on the table. Let me refer to our english dictionary for the definition of a counteroffer.
Mathew and Carl, prove to me otherwise. I am always looking to fine tune my business. David Burnham, I praise you for tuning in during real estate school.
does a counteroffer agreement become seperate and supercede the purchase agreement?
In answer to your question,..
It is not separate. It is usually in conjunction with.
you have 8 pages of language in the residential purchase agreement in California.
The 1 page counter offer is not separate. The counteroffer in Real Estate usually for the most part is a modification of terms that were in the offer. The latest agreement between two parties is the contract as a whole. lets say there are 26 items of terms and conditions in a contract a through z.
and lets say the seller stipulates item d should not be a part of the contract and does so in a counter offer.
if both parties agree, abc and e through z are all in effect.
The buyer could have before accepting can counter again and and stipulate abc fine no d ok and say item m hast to be omitted as well. If both parties agree a b c e through L and N through z will be in effect.
what it is in terms of reality is, all items agreed upon by both parties.
Harold Sharpe - Broker
So Cal Homes Realty
California Department of Real Estate Broker License # 01312992
There is no 'agreement' until both parties have signed mutually accepted terms.
On a site note, very little bums me out faster than a bunch (also called a hand depending on which state you are in) of bananas that looked good at the store only to turn brown and bad a couple of days after bringing them home. Wish I had a buyers inspection period on bananas....
Please explain to me how trashing other agents, in any way, assists this individual. The individual is either in a contract with another broker or is selling the home himself. If in the first case, would you who are offering help appreciate others jumping on your crap if you were the agent handling this transaction or should we stand by our code of ethics and let this individual know they should seek the answer to the question from the agent/broker they have an agreement with?
If they are indeed selling their home themselves, please explain to me how crapping on others is going to gain you a client. If they are this far along with the sale of a home themselves, exactly what chance do you really think you have in convincing them they need your services or being paid for such. It seems to me answering any question under these circumstances could subject you to implication of being an agent to the transaction. How much have you been paid for such an implication? Is that payment worth the liability you have just assumed without having the actual paperwork in front of you? Is the risk of loss of your license worth such risks or is it true policing our own selves is truly a joke?
It seems obvious our actions are earning further reason we are pitted between that of used car salesman and attorneys.
The individual had a second question, in which he stated he was in a transaction...would anyone like to now intermediate and try to become their agent without knowledge of the paperwork he is in the process of procuring free advice for?
"For a counter offer to be issued in the State of California you have a signed purchase agreement by both Buyer & Seller"
So your telling me that in Cali, that As a buyer I must first sign a contract that says 500,000 in order for me to counter at 450,000? Gotcha. So in other words, you want your buyers to give you an autograph on a contract they don't agree on. We need more popcorn.
"Any and all subsequent counter offers become a part of the purchase agreement."
I'm not arguing that you staple your counteroffer to the original purchase agreement. What I am saying is that the little paper that says counteroffer on the top that's stapled to the purchase agreement is a rejection of the original offer with a new offer being put on the table.
With 2 signatures on the original agreement that says 500,000, I'm praying that my agent isn't caught in a storm that blows away my counteroffer of 450,000 stapled on top.
I hear what your saying Matt. I appreciate the tutorial on CA paperwork however the debate here is very simple. I am disagreeing with your definition of a counteroffer.
In closing, I do want to say to all my fellow realtors ( including Matt, Carl and the rest of my fans) keep up the good work. Realtors work hard and deserve the recognition!
Here in Mass we have the offer, counter offers which when accepted then go to a purchase and sales agreement, which is the final document.
In New York, I understand its all verbal till it goes to the attorney's - I can understand why you left there.
Here in Washington, which has adopted most of California's practices, a buyer's agent prepares a Purchase & Sale Agreement, which s/he hopes is accepted by the Seller. As if. The two ways that offer is countered are: the listing agent marks up the P&SA with changes and has their client initial them, or the listing agent draws up a Counteroffer Addendum, noting the changes and presenting them to the selling agent for the Buyer to sign. In either case, the Seller initials and signs every page where required.
What Brian is referring to, I think we'd call a Contingency. Also an invitation to be beaten to a pulp by the bride's father, but that's another story!
The thing about a counter-offer is that it needs to be presented in an acceptable form, and by 'acceptable," I mean, that the receiving party can agree to it and enter into an executory contract.
But Carl explains it better than I do . . .
Thats like saying to your future bride at your wedding. "I do......as long as you lose 10 pounds."
What happened here folks is essentially what I am educating you about. Those words spoken was a rejection of the offer to marry and counteroffer put on the table. Sure there are similarities between Mary Jane now and Mary Jane weighing 10 pounds less however its a totally different agreement.
Carl and Matt, Im sure you feel some frustration as do I however I see it as a good thing. Good because it shows you care about the business. I do know my business however I do keep on open mind to learn and absorb as much as possible in real estate because learning in this business is never ending.
I do welcome you to invite other CA agents to chime in on this Q and A. If I am wrong, I want to know. So far, you have shown me no evidence other than referring to the fact that a counteroffer in CA is different than a counteroffer in the rest of the US.
Caroline York, I agree with your comments.
If you've got a counteroffer that doesn't include the contents of the prior offer, then you aren't really agreeing to anything except what's in the counteroffer - you agree on the price, for what? Under what terms? Where did all that information go?
A counter-offer does not supersede the purchase agreement. You can only have a counter-offer when there is no full agreement. The purchase agreement is the contract, and addendua may modify that contract. Only a new agreement can supersede the existing agreement.
Hope that helps,
Quoting Websters Dictionary is one thing, however actually reading and understanding the California Residential Purchase Agreement along with the many various State of California documents so that you may effectively and correctly explain them to a prospective Buyer and Seller are two different things. Clearly you do not have an understanding or knowledge of the various California Real Estate Contracts. But that is ok since you're a Broker in New Jersey. That being said, while I'm not Attorney you should know that in the State of California you must be licensed in the State of California to give Real Estate Advice in a public forum such as Trulia. The prospective Buyers & Sellers who ask questions on this forum expect that their questions will be answered by Brokers & Realtors who are Licensed in the State of California and therefore understand the various State contracts. For you a New Jersey Broker to be answering questions dealing with California Real Estate Purchase Contracts could be a violation of California State law and the Realtor code of Ethics. You could possibly lose your Broker's license in New Jersey and you could also open yourself up to further legal issues by answering a question incorrectly and potentially harming the person ansking a question. While I do NOT believe it is your intent to answer a question incorrectly or to harm anyone, you're infact putting yourself in a bad position by answering such market specific questions on matters you do not have an understanding of nor are you licensed to give an answer to. Good luck in the future!
I hope this helps.
An agreement is when both parties agree on price terms and conditions of a contract.