Questions for First Time Home Buyers: What is a Multiple Counter Offer?
After submitting an offer to a seller, a buyer might receive a counter offer. A seller may counter the price and/or terms of your original offer. Let's say you offered $365,000; the seller counters at $375,000. You offered to close in 45 days; the seller counters to close in 30 days. When presented with a counter offer, you can accept, reject, or counter offer. If you accept, you've created a contract between you and seller. If more than one buyer submits an offer to a seller, a seller may respond with a multiple counter offer.
How will you know if you've received a multiple counter offer? If your using California CAR forms, it's the same form as the counter offer, only paragaph #4 has been checked:
If you receive a multiple counter offer, it means you are not the only buyer to do so. At least one other buyer has received a multiple counter offer as well. Are the price and terms in the multiple counter offers the same for all buyers? Not necessary and probably not. When the seller countered you at $375,000 it may have been based on your finanicing; assume you're obtaining a FHA mortgage with 3.5% down. Furthermore, there was one other buyer who had offered $340,000 in all cash. Because an all cash buyer might represent less risk to the seller, he might be willing to take less from the all cash buyer. So while you were countered at $375,000, buyer#2 was countered at $360,000.
After the seller determines his counter offer to each buyer, the multiple counter offer is delivered to the respective buyers through their agenets. Again you have the options to accept, reject, or counter offer. Unlike a singular counter offer, your signature on the multiple counter offer does not create a contract. If you sign and accept the multiple counter you are accepting the sellers amended terms, but you don't have a deal yet. Since buyer#2 has the same options you do, it's very possible both you accept the multiple counter offer. Since the seller can't sell the house to each of you, he now gets to select a buyer.
When and if all multiple counter offers are returned to the seller, the seller now makes a decision. Let's suppose you were his leading candidate. Although buyer#2 is all cash, your offer nets the seller more money and you were much nicer when you came to see the seller's house. (Perhaps you complemented him on his fine collection of Revolutionary War memorabilia.) If the seller chooses you, he'll re-sign the multiple counter offer with your name on it that you signed which creates a contract.
A couple of important points to rembmer when working with muliple counter offers. The seller does not have to re-sign any of muliple counter offers returned to him. Also signing and retuning a multiple counter before other buyers does not automatically get you the house--the multiple counter offer is not a contest of who can sign first. If a seller is in the fortuante position to multiple coutner offer, he gets to see which buyers are willing to stay in the game and make a decision based on their responses.
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