top of page
  • Writer's pictureStuart Shefter

When is a Real Estate Offer Binding?

In real estate, timing is key. In a hot market, like the Triangle Area of NC, timing is everything. Chief among these is the timing of a contract. Simply put, when is a real estate contract fully-formed?

Below, I'll go beyond that to make sure you're armed with all the timing information. To kick things off, let's start with the question, "When is a contract executed?"

A real estate contract is executed when the offeree has signed the contract and communicated the acceptance to the offeror.

There's a lot going on in that sentence, so let's break it down and see why the timing matters so much.

Definitions in a Contract Negotiation

We have two parties involved in this transaction: the offeror and the offeree.

  • The offeror is the party making the offer.

  • The offeree is the party receiving the offer.

Keep in mind, the parties these definitions reference changes with who makes the offer.

You'll see what I mean in the next section.

Negotiation Examples

In your typical real estate transaction, the buyer (the offeror) makes an offer on a home. The seller (the offeree), can choose to accept, reject, or make a counteroffer.

If the seller accepts, great! The seller signs the offer, communicates the signing back to the buyers, and we have a binding contract. Usually, communicating it back means emailing a signed copy.

If the seller rejects the offer, they simply communicate the rejection back to the buyer, and that's that.

A counteroffer is where things get complicated. A counteroffer, by definition, rejects the original offer. AND the counteroffer places a new offer on the table. Now, the sellers are the offeror, and the buyers are the offeree. This back-and-forth continues until both parties either come to an agreement...or not.

Now let's look at communication timing.

Timing, Communication, and Cancelling

I've discussed agency in another article, and this plays a particularly important role in the timing of a contract. In the case of real estate, communicating to an agent is considered communicating to the party itself. For example, I am working with some buyers and we've made an offer on a house. Once the sellers have signed our offer and their agent notifies me, it's binding. It is, of course, my duty to immediately tell my buyers.

But what if the offeror wants to cancel their offer?

When you make an offer, you can cancel the offer at any time before it's binding. As long as you (and your agent) have not heard the contract is executed, you have the right to cancel.

Let's go back to my previous example: I'm working with buyers and we've made an offer on a home. The offer goes to the seller's agent, who then passes it to their sellers. At this point, we could cancel our offer. My buyers tell me to cancel the offer, I text (then email, then call) the seller's agent, then follow up with the official forms to cancel the offer. No problem.

Now let's take that same example, but this time, the sellers sign the offer and sit on it for a day. My clients can still cancel the offer because we have not been told they signed. Even if the sellers send the fully-signed offer to their agent, we can still cancel before their agent tells us.

Once the seller's agent tells us, that is the point we're under contract.

All in the Timing

I said it at the beginning: timing is everything. This is why I immediately follow up once I've sent a contract of any sort. It's my job to make sure the communication process is as smooth as possible. That means making sure all parties are aware of an offer's status so nothing falls through the cracks.

47 views0 comments

Recent Posts

See All


bottom of page