When Does An Offer On A Home Become A Contract?

If you want an offer on a home to become a valid real estate contract, you must understand the important concept of communication.

While I'm not an attorney, I do have some experience with real estate contracts that I have gained over the past 22 years.

That experience came into play yesterday, and I think it worthy of a blog post to help people who want to buy a home or sell a home understand the importance of "attention to detail". And timeliness on all things written. And the importance of communication.

How An Offer On A Home Becomes A Contract

offer on a home disclaimerBefore I proceed, I do want to remind you that I am not an attorney and I do not write for the purpose of dispensing legal advice.

Take what I say with a grain of salt, and if you think it warrants further review, I urge you to speak with an attorney on all legal matters.

The process to create a real estate contract begins with an offer on a home. Once this offer is received by the home seller, it is either accepted, rejected, or countered. Regardless of which response by the seller is chosen, none of them are effective until they are communicated to the buyer.

The "communication" step is the one that most untrained people do not understand.

Communication Of Acceptance

Yesterday, we received an offer on a home that we have listed for sale in the Tallahassee MLS. The terms of the offer included a suspense date of 3:00 p.m. (yesterday) for our response.

Our seller chose to counter (meaning the seller was now sending an offer to the buyer) and included terms that gave the buyer 24 hours to respond. After sending the counter-offer to the buyer, another buyer came forward and advised that they were bringing an offer. We consulted with the seller who wanted to consider the second offer and thus advised us to terminate his counter offer to the first buyer.

We immediately texted, emailed, and then called the agent of the first buyer with the notice of termination. This was done before the buyer "communicated" acceptance of the seller's counter offer, thus there was no contract (anybody who makes an offer on a home can terminate the offer before it becomes a contract).

The first buyer was understandably upset, stating that they had already signed (accepted) the seller's counter offer, and they felt there was now a contract.

But because there was no communication of acceptance, there was no contract. Additionally, this occurred after the 3:00 p.m. deadline in their offer, so there was now no offer from the first buyer for the seller to consider with the new offer from the second buyer.

We strongly advised the first buyer to resubmit their offer with a valid time for acceptance, which they did.

Now the seller had two offers to consider, and the seller still ended up accepting an offer from the first buyer.

An Offer On A Home Requires Communication To Become A Contract

So the moral of the story is that an offer on a home does not become a contract simply because all parties sign the agreement.

Learn how to make a smart offer on a home

The final step is for the final signing party to communicate the acceptance to the other party.

The situation yesterday could have been ugly for the first buyer had their agent not worked feverishly to get their new offer submitted. The seller could very well have sold the home to the second buyer and left the first one with bad feelings for a "deal that almost was." And it is scenarios like this that we see every day that make it so important for people to carefully choose a real estate professional that will help them when they buy and sell real estate.

Of course, if you want to make an offer on a home in Tallahassee, you can always drop me a note to schedule an initial interview that will put you on the path for getting the best deal available.

*Joe Manausa Real Estate is a brokerage company headquartered in Tallahassee, Florida. Its unique business model provides specialists to both home sellers and home buyers, and the results speak for themselves. JMRE has significantly more 5-star reviews on google than any other local competitor. Joe Manausa Real Estate is a leader in internet marketing and utilizes search engine optimization, email marketing, social media and data analytics to get their clients’ home sold faster and for more money than any other Tallahassee brokerage firm. For more information, visit www.manausa.com or call us at (850) 366-8917.


#1 By Eva at 7/11/2017 3:47 AM

Hi Joe - good story to share. My aunt experienced the same situation as the seller of her home, but it took them 6 months to resolve when buyer #1 sued to get the house. What a mess. Her's was resolved when the parties settled. Buyer #2 agreed to pay Buyer #1 an amount of money to drop the suit. They REALLY wanted her house!

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