Legal Library

Important Counteroffer Considerations

January 31, 2020

Author: Kreg Wagner (UAR)

Often on the Hotline I hear about confusion offer/counteroffer situations. It is so important for you to understand the components of contract formation. Let’s review some basics.

What is a counteroffer?

A counteroffer is a rejection of the original offer. This sounds harsh, especially if your client really likes the original offer and only wants to change one or two items. Doesn’t matter. A counteroffer is still rejecting the original offer and is proposing a new offer to the other party.

How do I properly counter an offer?

Let’s use the following scenario. Buyer submits an offer to the Seller. The offer has the 6-page REPC & Addendum #1 asking for $5,000 in Closing Costs. Seller really likes the Buyer’s offer but wants to raise the purchase price by $1,000. Here is where I often see confusion.

To properly counter this offer, the Seller would need to:

  1. Check “Counter” on page 6 of the REPC;
  2. Check “Counter” on Addendum #1 ($5,000 of Closing Costs); and
  3. Check “Counter” on Addendum #2.

Note that even though Seller is fine with paying the $5,000 in Closing Costs, the Seller still needs to counter Addendum #1 (DO NOT CHECK ACCEPT). Seller’s counteroffer in Addendum #2 is going to change the purchase price. EVERYTHING else that is not changed in Addendum #2 is going to stay the same, or in other words, become part of the Seller’s offer to the Buyer.

If you ever have any questions about contract formation, please feel free to call the UAR’s Legal Hotline at 801-676-5211 on Monday, Wednesday, or Friday.

Kreg Wagner

UAR Legal Counsel


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