When clients say they want to counteroffer on one item, such as price, and I give them a whole stack of paper to sign they generally raise a curious eyebrow at me.
So let me explain what’s happening.
Here’s a Typical Scenario
You’re a seller and you have received an offer on your land. Woo hoo! Happy dance! You’re pleased to have an offer. However, the price the buyer offered is too low. No problem – you will give the buyer a counteroffer on price.
Let’s say the buyer offered $150,000. You decide to counteroffer at $175,000.
The original offer from the buyer has 11 pages plus a bunch of additional disclosure pages for a total 15 pages (or more) and looks like this:
The one page counteroffer that your Realtor prepared for you to sign looks like this:
Your Realtor tells you that you must sign both the one page counteroffer AND the multi-page page offer.
“Why?” you ask.
You’re tired. You’re grumpy. You’d rather be curled up eating a plate of vegan brownies and watching another episode of RuPaul’s Drag Race instead of dealing with all this paper pushing . . . oh wait, that’s me I’m talking about . . .never mind . . .
Anyway, you just want to sign one page . . .
Plus, you’re confused because the original offer contains the low price of $150,000 and you will not accept that price. Won’t the buyer get the wrong idea and think you’re accepting their low offer, you wonder? Why can’t you just sign your one page counteroffer at $175,000? Why do you have to sign all those other dumb pages too?
In my office I get this question at least once a month.
Here’s the Scoop
In California, sellers who give buyers a counteroffer, actually “accept” the buyer’s offer “subject to” the seller’s counteroffer.
“Huh?” you say. “I thought I was rejecting their low offer, not accepting it” you say to me.
Let me explain. The offer will usually be on the standard California Association of Realtors (CAR) vacant land purchase agreement (VLPA). Look at paragraph 38 at the top of page 11. See the box there for you to check? When you give the buyer a counteroffer you will check the box in paragraph 38 like this:
Checking that box and signing all pages of the offer means that you are cool with all the other stuff in the offer except the things you put in the counteroffer. If you are countering on price only, then you are saying you are comfortable with other blah blah the buyer put in their offer like the length of the escrow period, the buyer’s choice of title company, who pays the closing costs, etc. That is, you are “accepting” all that other stuff.
But wait, wait, just a minute now, are you really OK with all that other stuff you wonder?
Well, I guess you will have to actually read the fine print in the original offer won’t you?
After you’ve actually read the offer, discuss any questions with your Realtor. She will be pleased
to advise you on what is reasonable and customary in your area. If you’re not comfortable with somet
hing in the offer, and want to propose an alternative, put that in the counteroffer too. Counter on everything you want to at the same time in the same counteroffer.
After preparing a complete one page counteroffer and signing it, check the box on the offer indicating that you are accepting the offer but only subject to the attached counteroffer dated <today’s date> and initial/sign all pages of the offer. Your agent will then give the whole thing to the buyer (like 16 pages total) and tell them that you are “countering” which is the same thing as “accepting their offer, but only subject to your counteroffer”.
It will be clear to the buyer that you have agreed to all of aspects of the buyers offer except those things you mention in the counteroffer. Basically, anything you put in your counteroffer as seller over-rides the corresponding item in the offer. So, for example, if you put “Price to be $175,000” in the counteroffer that overrides the price of $150,000 in the offer. As another example, if you were to put “closing in 21 days” in the counteroffer that would override a 45-day closing in a buyer’s offer. There is no confusion.
Conversely, because you are “accepting” the offer (subject to the counteroffer), anything you omit from your counteroffer will be considered agreed to by both parties. For example, if you don’t mention in your counteroffer how closing costs will be apportioned, then the cost-sharing proposal in the buyer’s offer will be the one that both parties have agreed to.
So if you want to address anything as seller, the first counteroffer is the time to do it. It’s a bad strategic idea to bring up changes later in the negotiation and an even worse move to bring them up after escrow is open. (I remember on my high school debate team we were admonished “no new arguments in rebuttal.”) So read the fine print and put it all in this initial counteroffer.
The Bottom Line
Selling land is not only about price. It’s about price and terms. Review the terms in the offer. When giving the buyer a counteroffer, California sellers should sign the one page counteroffer and the entire offer too!