What effect does a counterproposal have on the original offer?

A counterproposal has the effect of terminating the original offer. When one party makes a counterproposal, they are essentially rejecting the original terms and proposing new conditions, which shifts the negotiation dynamics. This action shows that the original offer is no longer on the table and that the parties are moving to a new set of terms to discuss.

In real estate transactions, understanding that a counterproposal effectively kills the initial offer is crucial. This means that the original offeror must then decide whether to accept the counterproposal, make another counter to it, or walk away from the negotiation entirely. This process is pivotal, as it ensures that both parties are actively engaged in shaping the terms of their agreement rather than being bound to an offer that they may not fully accept.

While it’s true that a counterproposal does not create a binding agreement until all parties agree to the new terms, it does not extend or modify the original offer itself, thus underlining its role in terminating the first offer.