contracts

offer

A proposal by one party to enter into a contract on specific terms, which becomes binding when the other party accepts it unconditionally and the acceptance is communicated. The person making the offer is the offeror and the one receiving it is the offeree. An offer can be revoked before acceptance and ends upon rejection, a counteroffer, expiration, or death of either party.

Exam tip: Any change to the terms is a counteroffer, which rejects the original offer. An offer may be withdrawn any time before acceptance is communicated.
Example: A buyer offers $350,000 with a 30-day closing; the seller signs it unchanged and notifies the buyer, creating a contract.

1. A buyer contracts to buy a home for $300,000, but it appraises at $290,000. The lender offers 75% LTV. What is the maximum loan?

Answer & explanation

Answer: B. LTV is applied to the LESSER of price or appraised value: $290,000 x 0.75 = $217,500. Using the $300,000 price ($225,000) is the common mistake.

Related terms & state variants

acceptance counteroffer meeting of the minds mutual assent

Sources

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Last verified: 2026-10-23