WHAT IS A Subject Offer
A subject offer is a financial term for a specific type of informational offer.
BREAKING DOWN Subject Offer
A subject offer does not represent a firm commitment to sell. It is subject to receipt of a counteroffer, which may later be followed by a sale. Sellers use subject offers to gather information on their asset. Rather than placing an asset immediately into the market for sale, a subject offer enables sellers to assess the demand environment.
In some instances individuals use subject offers to elicit a counteroffer from a willing buyer. Subject offers are commonly used in the bargaining process of a transaction. An offer itself is a conditional proposal made by a buyer or seller to buy or sell an asset, which becomes legally enforceable if accepted. A subject offer is one of many different types of offers, each of which has a distinct combination of features ranging from pricing requirements, rules and regulations, type of asset and the buyer's and the seller's motives.
Subject Offer Versus Counteroffer
A subject offer does not by definition necessarily depend on a counteroffer, but subject offers often elicit a counteroffer. A counteroffer is a proposal made as a result of another offer. A counteroffer revises the initial offer and makes it more desirable for the person making the new offer. This type of offer permits a person to decline a previous offer, and if the original offer came without any formal commitment, it is known as a subject offer. Both subject offers and counteroffers are important parts of the negotiation process.
When participating in negotiations, two parties participate to find terms that both find acceptable. In the case of selling a house, a seller might entertain subject offers in hope of receiving higher counteroffers. But there is more to a counteroffer than the price alone. There are several forms of a counteroffer, including a seller’s acknowledgment of an order that provides estimated delivery dates. After receiving a counteroffer on your home in response to the subject offer, you as the home seller can offer a counteroffer to the buyer's counteroffer, and so on. The buyer has three options when responding to a counteroffer: accept it, reject it or present another counteroffer. If the buyer rejects the offer but later changes his mind and wants to accept it, the offeror cannot accept the offer. The offeree must present a new counteroffer. There is no limit to the number of times an offeree and offeror can counter each other during negotiations.