Understanding Seller Multiple Counter Offers (SMCO) in California Real Estate
When multiple offers come in on a property, sellers in California often use a tool called the Seller Multiple Counter Offer (SMCO). This legal form, approved by the California Association of Realtors (C.A.R.), helps sellers manage competing offers strategically while retaining flexibility and control.
What is an SMCO?
An SMCO allows a seller to counter multiple buyers at the same time—without committing to any single one until a final decision is made. This differs from a standard counteroffer, which becomes binding once the buyer accepts.
Key features:
Sellers can send different terms to different buyers, tailored to each offer.
Buyers are clearly informed that they’re in competition with others.
The seller retains the right to continue marketing the property until final acceptance.
How SMCO Works: Step by Step Example
Scenario: A seller lists their home at $800,000 and receives three offers:
Buyer A: $780,000, 21-day loan contingency.
Buyer B: $800,000, but requests $10,000 in closing cost credit.
Buyer C: $815,000, but wants 17 days for inspections and appraisal.
Step 1: Seller Issues SMCOs
Buyer A’s Counter: $800,000 purchase price, 17-day loan contingency.
Buyer B’s Counter: $810,000, no closing cost credit.
Buyer C’s Counter: $820,000, 10-day inspection, 14-day appraisal contingency.
Step 2: Buyers Respond
Buyer A rejects and walks away.
Buyer B accepts at $810,000.
Buyer C accepts at $820,000 with reduced contingencies.
Step 3: Seller Chooses Both Buyer B and C accepted—but the seller picks Buyer C for the higher price and stronger terms.
Step 4: Final Acceptance The seller signs Buyer C’s counter acceptance. Buyer C enters escrow at $820,000. Buyer B, despite agreeing to their counter, is not in contract because the seller chose otherwise.
Key Takeaway: For sellers, the SMCO is a way to create competition and maintain choice. For buyers, accepting an SMCO means: “I agree if you choose me”—but the seller makes the final call.
Legal Mechanics of an SMCO (Per the C.A.R. Form)
Not Binding Until Final Acceptance
Buyer’s acceptance alone does not make a contract.
A binding agreement requires:
Seller’s initial signature (to issue the SMCO),
Buyer’s acceptance,
Seller’s final acceptance (Paragraph 8),
Delivery of the fully signed form.
Deadlines and Seller’s Rights
The SMCO includes firm response deadlines.
Until the seller signs again, they may continue marketing and can even accept offers from buyers not included in the original SMCO.
Why Sellers Use an SMCO
Maintain Control: No binding agreement until the seller signs again.
Stimulate Better Offers: Creates competition among buyers.
Flexibility: Terms can be tailored for each buyer.
What It Means for Buyers
No Guarantee Yet: Acceptance doesn’t bind the seller.
Act Quickly: Firm deadlines apply, and another buyer’s stronger terms may win.
Options: Buyers can accept, counter back (via Buyer Counter Offer), or decline.