What's the Difference Between an Offer and a Contract?

What's the Difference Between an Offer and a Contract?

The language we use when talking about real estate transactions is important.  In fact, in some situations the difference in one single word used over another can be critical to understanding what is happening, or what is expected in a real estate transaction. 

You'll often see the word CONTRACT used when the word OFFER should be used.  There is a very big difference between the two words.  They are not interchangeable.  Real estate professionals know the difference, but so should you as a Buyer or Seller.

An OFFER is what a Buyer makes to a Seller, or vice versa.  It is all the terms under which the Buyer would like to purchase the property.  It has been accepted in writing by only one party, that one making the offer.

The Seller can counter-offer those terms, making changes and sending them back to the Buyer for review.  Again, if this were the case, the terms have been changed and the changes have only been accepted by one party.

You don't get to the point of CONTRACT until all parties all agreed to all the terms IN WRITING.

As a Buyer you make OFFERS on properties.  You do not write CONTRACTS.  You are putting forth the terms under which you would like a contract to exist.  When accepted by the Seller your OFFER will become a CONTRACT, but not until it is accepted in writing.  Knowing the difference can be critical when explaining a multiple offer situation.  If you said you were dealing with a Seller than had multiple CONTRACTS, you are dealing with a Seller who has agreed in writing to sell one property to multiple Buyers.  That is a nightmare.  If you are dealing with a Seller who has multiple OFFERS, you want to be the one the Seller signs and turns into a CONTRACT.  It can be a competitive situation, but is not screaming for one or more lawsuits. 

When a CONTRACT exists both parties to it have obligations to perform.  An OFFER has no such obligation until the terms of the OFFER are accepted by all parties.
 

 

Chris Ann Cleland, Associate Broker- Licensed in Virginia, GRI, SFR, Northern Virginia Short Sale Specialist. Affiliated with Long & Foster, 7526 Limestone Drive, Gainesville, VA 20155.  To contact Chris Ann, call 703-402-0037 or email chrisann@LNF.com.  Or you can visit her website:  www.nvarealestate.net.

Header is a combination of photos, taken by Chris Ann Cleland, of various listings and neighborhoods in the Bristow-Gainesville-Haymarket area.