Hawaii Real Estate State Practice Exam

What is true when a buyer and seller go through several rounds of negotiations on an offer?

1. All counter offers must be included with the original Purchase Contract.

2. If the only change is the price, the original price is crossed out on the contract.

3. Only the seller may make a counter offer.

4. Each counter offer rejects the original offer.

The correct answer is: Each counter offer rejects the original offer.

When a buyer and seller engage in several rounds of negotiations on an offer, it is true that each counter offer effectively rejects the previous offer. This means that once a counter offer is made, the original offer is no longer valid, and the buyer or seller must respond specifically to the new terms presented in the counter offer. This process reflects the nature of negotiation in real estate transactions, where both parties may adjust their terms—whether it be price, contingencies, or other conditions. The legal framework that governs contract law supports this principle, ensuring clarity and order in negotiations. It prevents confusion about which terms are still up for discussion and which have been definitively set aside. Understanding that each counter offer nullifies the original offer is essential for both buyers and sellers. This knowledge allows them to keep track of the latest terms on the table and aids in effective decision-making throughout the negotiation process.