In real estate, an executed contract is one that has been accepted by both parties. Essentially, acceptance is both parties to the transaction coming to an agreement whereupon a sale is pending if all of the conditions of the agreement are met and adhered to as agreed in the contract. Acceptance, however, can be a commonly misunderstood area. There are many types of acceptance in real estate.
The most common and most binding type of acceptance is a signature from a buyer or a seller on a contract. When a buyer submits an offer to purchase, he is accepting the terms of the sale if the seller agrees to and accepts the offer written "as is." This is a common type of acceptance. Should the seller agree to the terms as written by the buyer, that constitutes offer acceptance, and the sale will proceed under the terms dictated by the buyer.
The seller, however, will typically make changes to an offer, counter and send it back to the buyer. The seller will sign and say that they accept the offer if the terms are amended to reflect the changes they have made to the purchase. The buyer either rejects the offer or accepts it by initialing next to the seller's proposed changes on the contract, indicating acceptance. Once the offer has changed hands enough times for both parties to be satisfied with it, all items are initialed and signed off on, the final acceptance is made and escrow can be opened.
While not as legally binding as contractual acceptance, another type of acceptance is written. A written acceptance can originate only from a buyer or seller in a transaction, but can be conveyed through their representation (real estate agent or attorney). A written acceptance can be as formal as a letter stating that the buyer or seller will accept the terms outlined by the other party, or could be as simple as an email message acknowledging the acceptance of the offer or counter offer. Even though this type of acceptance is not as legally binding as a formal contractual acceptance, it is recognized by most state legislations as a form of binding acceptance. Thus, it becomes enforceable.
Oral acceptance is the the least recognized of the types of real estate acceptance. If a buyer and seller come to a verbal agreement on the terms of a purchase contract, that agreement should be considered binding by all parties and immediately transferred to a contract to formalize it. However, if any items are changed from the verbal agreement onto the contractual agreement, the verbal agreement can still be considered binding in a court of law.
- Real Estate ABC: How do I close my real estate transaction
- MLS Homequest: Transaction process flowchart
- RE/MAX Compliance: Acceptance: Bonnie Wilson, 2009