What is the legal effect of a counteroffer in real estate negotiations?

A counteroffer in real estate negotiations serves a critical function by fundamentally altering the terms of an original offer. When a counteroffer is made, it effectively voids the original offer because it conveys to the original offeror that the offeree (the person making the counteroffer) is not willing to accept the terms as they stand and is proposing new terms instead. This action resets the negotiation process, making the counteroffer the new basis for potential acceptance or further negotiation.

In the context of real estate transactions, the importance of understanding this legal effect is paramount. It clarifies that both parties are actively engaged in discussions and that no agreement has been reached until one of the parties accepts the new terms presented in the counteroffer. Therefore, once a counteroffer is made, the original offer is no longer valid, and the parties must now focus on the new terms proposed.