Sometimes, a buyer will make an offer, the seller will accept it without any changes and a contract will be formed, without negotiation.  More commonly, an offer will be meet by a counter-offer, which itself gets a counter-offer, and all of these offers and counter-offers will have numerous contingencies.  It is easy to get confused in such a negotiation.  Here are the basic rules.

Offers. An offer should identify the property to be purchased, the purchase price, whether the offer is contingent upon a loan being obtained or another property sold and any other terms relevant to the buyer.   When making an offer, it is critical that you include all of the deal points that are important to you; if the other side accepts your offer, it may become a binding contract, with no further negotiation.

Counter-offers.  A counter-offer is when the seller indicates that he or she is interested in selling the property, but upon different terms than the offer, such as higher price, shorter escrow or other different terms.   Again, when making a counter-offer be sure to include all terms that are important to you; if your counter-offer is accepted, you may have entered into a binding contract, with no further discussion.

A contract is not actually formed until the two parties agree upon all of the material terms of the agreement.  As a rule, the contract is formed, in a legal sense, when one of the parties signs off on an offer or a counter-offer, which the other side has made.  Bear in mind that a binding contract may have been formed, even if all of the terms of the deal are not spelled out; the legal rule is that all “material” terms need to be stated, and it is hard to predict what terms a court will consider to have been “material.”

If you are using a broker, he or she will usually have you make offers and counter-offers on pre-printed forms that are prepared by the California Association of Realtors.  These forms are useful.  Bear in mind, however, that any type of writing may be considered to be an offer or counter-offer by a court.