Even when buyers submit an offer at the sellers' asking price and with no contingencies, there's no guarantee they'll get the house.
By Ann O’Connell, Attorney UC Berkeley School of Law
Updated 9/04/2023
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Occasionally, home sellers receive a "perfect" offer: The buyers agree to pay the full asking price, and aren't placing any contingencies (requirements such as receiving a good inspection report or being approved for financing) on completing the property closing.
It's understandable that many sellers—and often their real estate agents—believe they must accept a perfect offer. After all, aren't the buyers giving the sellers exactly what their listing asked for? However, there are currently no U.S. laws that require this. Home sellers are free to reject or counter even a contingency-free, full-price offer, and aren't bound to any terms until they sign a written real estate purchase agreement.
- Offering to Pay What a Seller Asks Is Nowhere Near Being "in Contract"
- Real Estate Purchase Agreements Must Be Signed and in Writing
- Look Into Local Practices Regarding List Price and Expected Selling Price
Offering to Pay What a Seller Asks Is Nowhere Near Being "in Contract"
In order to be legally binding, a real estate purchase contract must contain enough detail for a court to be able to enforce it in the event of a dispute. A promise to buy a house without more detail than price and lack of contingencies is not definite enough to enforce, as the parties would still have many more terms to work out. For example, a typical purchase agreement addresses:
- when, where, and how the closing will occur
- how disputes over the agreement will be decided
- how much earnest money the buyers will put down
- who will hold the earnest money
- who will pay for and who will provide title insurance
- what will happen if the property is damaged or destroyed before closing, and
- any other related (and legal) issues the parties intend to be bound by.
And, it's not enough for buyers to one-sidedly include these details in an offer—it's also essential that the parties mutually decide on the terms (have a "meeting of the minds," in legalese) as a matter of their own free will and without undue influence.
Because an offer to buy at the list price with no contingencies addresses only two of the matters that buyers and sellers need to agree on, sellers are free to counter a "perfect" offer or even reject it for any non-discriminatory reason. Unless the buyers and sellers reach a mutual understanding about the details of the arrangement, neither is obliged to move forward with the transaction. (See Home Buying Timeline: From Offer to Purchase Contract for more on this part of the process.)
Real Estate Purchase Agreements Must Be Signed and in Writing
Laws in every state impose two additional requirements on real estate purchase contracts: They must be in writing, and the writing must be signed by all parties. Oral agreements—even if the parties have worked out all the details—are not enforceable. And, even a detailed written agreement isn't enforceable until all parties have signed it.
This means that even if a potential buyer presents a fully detailed, written contract that meets all of the sellers' needs and wants, the sellers would not be bound by it until and unless they sign. Because no one can force a seller to sign (contracts must always be signed freely and without undue influence to be binding), a seller doesn't have to accept even a supposedly "perfect" offer.
Look Into Local Practices Regarding List Price and Expected Selling Price
You'll avoid disappointment and delays in your home search by learning more about what a property's list price really means in your area. It could mean that the house seller really would be happy to accept the listed price (especially if the seller mentions "transparent pricing.")
But the list price is more likely to be a little below what the seller is really hoping for; a common strategy in order to incite a bidding war among eager buyers. Depending on how much you want a particular house, and what you and your agent have observed about local demand and pricing trends, you yourself might want to bid far over the list price.
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