Counter Offers – SMCO / SCO / BCO

Proper use of Counter Offers

  1. A Counter offer is basically an additional page is being added to the Agreement changing the initial terms. It is like “page 18” being added. Then another counter is like “page 19,” etc.
  2. There may be several “counters” back and forth between the Seller and the Buyer until final agreement is reached between both parties [Seller & Buyer].
  3. Once final agreement is reached, and the contract is “ratified.”
  4. The final agreement (either the original Offer or the last Counter Offer) is then returned to the originating party [or Agent]
  5. Acceptance is defined in the RPA 25.A. – “Acceptance” means the time the Offer or final Counter Offer is fully executed, in writing, by the recipient Party and is Delivered to the offering Party  or that Party’s Authorized Agent (generally by Electronic Delivery).
  6. Time frames begin the day after confirmation of Acceptance.

The Counter Offer Process

  1. If an Offer is not accepted exactly as written, then the Seller may choose to “counter” the offer.
  2. SMCO [Seller Multiple Counter Offer] is used when the Seller decides to counter more than one Buyer’s offer. This indicates that more than one Buyer is still in negotiation.
    1. Each SMCO, even though being presented to different Buyers, should be labeled as SCMO #1.
    2. Buyer receiving the SMCO #1 should understand that the terms of each “multiple” counter offer may be different than the one they receive.
      1. It is often good to counter back to the Seller with a BCO #1 increasing the offer price or some other term that might encourage the Seller to accept your offer over another Buyer.
    3. If Buyer accepts the SMCO #1 as written, Buyer signs & dates it. However, Parties are still not in contract yet.
      1. The SMCO #1 goes back to the Seller to sign in paragraph 8 (SELECTION OF ACCEPTED MULTIPLE COUNTER OFFER) accepting only this Buyer .
      2. Then the SMCO #1 is then delivered back to Buyer, or Buyer’s Agent.
  1. SCO [Seller Counter Offer]. This indicates there is only one Buyer involved.
    1. If Buyer accepts the SCO #1 as written, Buyer signs and SCO #1 is sent back to the Listing Agent.
    2. If Buyer wants to change anything . . .
      1. Buyer signs SCO #1 “subject to” BCO #1
      2. Buyer signs BCO #1 and sends both the SCO #1 and BCO #1 to Listing Agent.
      3. If Seller accepts BCO #1, Seller signs and delivers back to Buyer, or Buyer’s Agent.
      4. If Seller does not agree to BCO#1, Seller sign BCO #1 “subject to” SCO #2.
      5. Seller then signs SCO #2 and send back the BCO #1 and SCO #2, etc.

Do not use an Addendum to “counter” an Offer.

  • The proper way to “counter” the terms in an Offer to Purchase.
    1. Seller may “counter” with a SMCO [Seller Multiple Counter Offer] if “countering” more than one offer.
    2. Seller may “counter” with a SCO [Seller Counter Offer] if only “countering” only one offer.
    3. Buyer may “counter” the Seller’s SMCO or SCO with a BCO [Buyer Counter Offer].
  • Do not mark “Subject to” on RPA page 10 with an Addendum. It should always be “subject to” a SMCO or SCO.
  • Addenda should only be used to change the “terms” an an Agreement.
  • An Addendum still could be an attached part of a counter offer, but not in place of the counter itself.
in Buyers, Listings