Counteroffer, Inspection Deadline, and a Late Higher Offer
Seller Pat lists a Laramie duplex at $415,000. Buyer Quinn submits a written offer of $400,000, $5,000 earnest money, a 30-day financing contingency, a 10-day inspection contingency, and closing in 45 days. Pat counters at $410,000, and Quinn signs and delivers the counter by the stated deadline. Two days later Pat receives a $420,000 offer and tells the listing agent, 'I'll accept the original $400,000 if Quinn will release me.' Quinn's inspector finds a cracked foundation; Quinn gives written notice within the inspection period requesting an $8,000 credit. Pat refuses and says the deal is 'as-is' and Quinn forfeits the earnest money.
1. Is there a binding contract, and at what price? Explain the effect of Pat's later statement and the $420,000 offer.
Read the worked answer
A binding contract exists at $410,000. Pat's $410,000 counter was a new offer that terminated Quinn's $400,000 offer. Quinn accepted it in writing and delivered it by the deadline, so the contract formed at $410,000. Pat's later statement that he would accept the original $400,000 is ineffective because that offer was already dead, and a contract cannot be unilaterally rewritten. The $420,000 buyer can only make a backup offer, and Pat cannot sell to that buyer unless the Quinn contract is properly terminated or breached and the remedy process is followed. The listing agent should not tell Pat he can simply accept the higher offer.
2. What are Quinn's options under the inspection contingency, and how should the earnest money be handled?
Read the worked answer
The inspection contingency gives Quinn a contractual right to act within 10 days. If Quinn timely gives written notice that the inspection is unsatisfactory and terminates, the earnest money should be returned; an 'as-is' clause limits repair obligations but does not erase an express inspection and termination right unless the contract clearly says so. If Quinn instead asks for an $8,000 credit, that is a proposed amendment; Pat may refuse. Refusal does not automatically give Pat the earnest money if Quinn then terminates within the inspection period. The sequence of written notices and deadlines controls. The broker should calendar the deadline and get everything in writing.