The term "counter offer" is perhaps one of the most often used yet least understood words in the broker's real estate vocabulary.

Generally speaking, a counter offer or counter proposition has been made when, for example, a seller has accepted some - but not all - of the terms of a buyer's offer to purchase. The seller "counters" the buyer's offer usually by striking through the objectionable terms or by adding his own terms to the buyer's original offer, mistakenly thinking that he can always accept the buyer's original offer at some later time should the buyer refuse to accept his new conditions. WRONG!

A counter-offer constitutes a rejection of the original offer, and, once rejected, an offer is gone forever unless the offeror (person making the offer) reinstates it or offers it again. A subsequent attempt to accept it will not be effective.

As agents and advisors to persons involved in real estate transactions it is essential that you have a proper understanding of the effects of counter-offers, and as licensed real estate brokers and salesmen you are reminded that copies of (counter) offers must be delivered to the parties thereto within 5 days from the date of execution (Licensing Board Rule .0106) with one copy being retained by the broker in his files for a period of at least three years (Rule .0108).

The developers of our licensing examinations inform us that examinees tend to experience the least difficulty in answering those math questions dealing with brokerage commissions. This is perhaps understandable since it is a subject of great interest both to practicing and aspiring brokers and salesmen. It is surprising, however, to hear experienced brokers and salesmen improperly labeling the very agreement which provides for the payment of such commission - the listing agreement.

We frequently hear licensees using the terms "listing" and "option" interchangeably despite the fact that each has a meaning and significance of its very own. A listing agreement is, in fact, an employment agreement between principal and agent, while an option is a contract granting a right to purchase or lease certain property for a certain specified period of time.

Although a listing contract may contain a provision giving the broker an option to purchase the listed property, the use of such a provision is not encouraged since it would place the broker in the conflicting position of being both agent (with respect to the listing) and principal (with respect to the option).

Remember these very basic and important distinctions when using these terms.

Listings, options, contracts to purchase and sell, and offers to purchase are all fundamentally contracts. However ' as between listings and options, an "offer to purchase" can and should be distinguished from a "purchase contract" or "contract of sale" or simply "contract". Listed below are several important characteristics of each instrument which should help you differentiate between them.

Offer to Purchase:

1. Expresses the deal the prospective buyer wants to propose to the seller and generally constitutes the starting point for negotiations;

2. Does not require earnest money to be valid;

3. Can be withdrawn by the offeror (person making offer) at any time prior to acceptance by the offeree (person receiving offer) even if offeror states that the offer will remain open for a specified period of time;

4. If withdrawn prior to acceptance by owner-seller, the prospective buyer is entitled to a full refund of any earnest money deposit;

5. Obligates neither the offeror nor offeree.

Purchase or Sales Contract:

1. A legally enforceable agreement created by the acceptance of an "offer to purchase" which generally constitutes the conclusion of negotiations;

2. Does not require earnest money to be valid;

3. Cannot be withdrawn or revoked by either party after acceptance of offer has been communicated to offeror;

4. Obligates both the vendee (buyer) and vendor (seller) to perform according to the terms of their mutual agreement.

Remember: An offer must be unconditionally accepted before a contract is created. When using the terms "offer" and "contract" be careful to employ the term which correctly befits the status of the instrument.

In recent years, North Carolina real estate brokers and salesmen have shown increasing interest in obtaining nonresident real estate licenses in other states; likewise, the North Carolina Real Estate Licensing Board has observed an increase in demand for nonresident North Carolina real estate licenses. In applying for or inquiring about such nonresident licenses, the term "reciprocity" naturally surfaces - often being used incorrectly and indicating a general misunderstanding of the meaning and application of this term.

The North Carolina Real Estate Licensing Low contains a provision whereby an applicant from another state which offers licensing privileges to North Carolina residents may qualify for a nonresident North Carolina real estate license by (1) satisfying the qualification requirements demanded of North Carolina residents seeking North Carolina real estate licenses, and (2) satisfying such other terms and conditions required of North Carolina residents applying for licenses in such other state. This mutual agreement between states for the exchange of licensing privileges upon equal terms and conditions is referred to as a reciprocal licensing agreement or simply "reciprocity".

Note that the term "reciprocity" does not denote "transferability" in the sense that licenses may be transferred from one state to another. Nor does it entitle a broker or sales man to engage in real estate activities in a "reciprocal state" without first obtaining the required non-resident license. However, primarily to accommodate licensees wishing to transact business in a bordering or neighboring state, licensing authorities (Boards and Commissions) may exempt from written examination a broker or salesman duly licensed in another state if that state similarly exempts their residents from examination. This exemption is presently contained in reciprocal licensing agreements with Alaska (to be cancelled effective 1/1/78), Arkansas, Connecticut, Delaware, District of Columbia, Georgia, Kentucky, Maryland, New Jersey, South Carolina, Tennessee, Virginia, and West Virginia.

Persons interested in applying for nonresident licenses from another state should contact the real estate commission or licensing body in that particular jurisdiction. We shall be happy to furnish you their mailing addresses and telephone numbers.