How Counter-Offers Work in Ontario Real Estate Transactions

Receiving or making a counter offer in Ontario real estate is one of the most common — and most misunderstood — parts of buying or selling a home. A counter-offer isn't just a polite reply. In law, it is a rejection of the original offer and the creation of a brand-new offer. Understanding that distinction can save you from costly mistakes at the negotiating table.

Whether you are a buyer who submitted an offer below asking price or a seller who wants different terms, this guide explains the legal mechanics of counter offers in Ontario, what gets negotiated, and when it is time to stop going back and forth and just sign.

A lawyer should be involved from the moment an offer is on the table — not just at closing. That said, here is what everyone in an Ontario transaction should know.

What a Counter-Offer Actually Is (The Legal Mechanics)

In Ontario, most residential transactions use the Agreement of Purchase and Sale (APS), a standard-form contract regulated by the Real Estate Council of Ontario (RECO). When a buyer submits an APS, it is a contractual offer: the buyer is bound by its terms for a specified period called the irrevocable period.

When the seller responds by changing any term — the price, the closing date, what's included — that response is not an acceptance. It is legally a rejection of the original offer combined with a new offer. The original offer is extinguished the moment the counter is signed and delivered. The buyer cannot go back and accept their own earlier offer, even if the seller's counter turns out to be worse.

This is why every counter-offer must be taken seriously. Once you counter, you have walked away from the deal on the table.

Initialling Changes vs. a Fresh APS

In practice, Ontario counter-offers are handled in one of two ways:

• Marking up the existing APS: The responding party crosses out the term they want to change, writes in the new term, and initials beside the change. Every change must be initialled by both parties once agreed upon.
• Signing a fresh APS: Sometimes the parties start over with a clean document, especially when there are many changes or the original document has become hard to follow.

Either method is legally valid, but a clean document reduces the risk of missed initials or ambiguous crossed-out text causing a dispute later. Your lawyer can advise which approach fits your situation.

The Irrevocable Period on a Counter-Offer

When a seller (or buyer) signs a counter-offer, they set a new irrevocable period — a window of time during which the counter cannot be withdrawn. Once that deadline passes without an acceptance, the counter expires and neither party is bound to anything.

Choosing the right irrevocable deadline matters:

• Too short, and the other party may not have time to review the changes with their lawyer or agent.
• Too long, and the party who countered is stuck — they cannot accept a competing offer or change their mind while the counter is live.

In a fast market, irrevocable periods of a few hours to a day are common. In slower markets, a day or two is typical. As of writing, there are no legislated minimums for residential irrevocable periods under the standard APS, but best practice is to give the other side reasonable time to respond.

What Gets Negotiated in a Counter-Offer?

Any term in the APS can technically be countered. In practice, the most common negotiation points are:

Purchase price — The most obvious item. Buyers often start below asking; sellers counter closer to (or at) their asking price.

Closing date — Sellers may need more time to find their next home; buyers may need to align with a lease end or mortgage commitment. A flexible closing date can be the factor that closes a deal even when the price gap is small.

Chattels and fixtures — What stays with the property? Appliances, window coverings, light fixtures, and outbuildings must be listed specifically in the APS. Disputes over a refrigerator or a garden shed can derail a transaction. Counter-offers sometimes add or remove items from the chattels list.

Deposit amount — The deposit is part of the purchase price held in trust by the listing brokerage. Sellers sometimes counter to require a larger deposit as a sign of good faith.

Conditions — Common conditions include financing approval and a home inspection. Sellers in competitive markets may counter by requesting that conditions be removed or shortened. Buyers should think carefully before waiving conditions — doing so is legally binding and leaves little recourse if problems arise.

Inclusions and exclusions — Things like a dining room chandelier the sellers want to take, or a hot tub the buyer wants left behind, are frequently the subject of a counter.

If the Counter Expires Without a Response

If the irrevocable period passes and no acceptance has been communicated, the counter-offer dies. There is no deal. Either side can walk away or start fresh. Neither party owes the other damages simply because a counter lapsed — but any deposit that was submitted with the original offer must be returned promptly.

Multiple Rounds of Countering — and When to Stop

There is no legal limit on the number of times parties can exchange counter-offers. However, each round carries risk:

• A better offer may arrive. A seller who is countering Buyer A cannot bind Buyer A while simultaneously entertaining Buyer B — once an irrevocable counter is out, the seller must wait for it to expire or be accepted before dealing with another buyer.
• Goodwill erodes. Buyers who feel nickeled-and-dimed sometimes walk away on principle. Sellers who see a buyer grinding them down on price and terms may be less cooperative later (on repairs, access for contractors, or timing).
• Mistakes happen. Every round is another chance to mis-initial a change, omit a term, or create an ambiguity that a court must later resolve.

A useful rule of thumb: if you are two or three rounds in and the gap is small, consider whether the legal, agent, and emotional costs of another round are worth it. An experienced lawyer can help you see the deal clearly rather than getting caught up in the negotiation itself.

Multiple Offer Situations

When a seller receives more than one offer on the same night, they can accept one, sign back (counter) one, or reject all. They cannot counter more than one offer at a time — doing so could create two binding contracts. Sellers in a multiple-offer scenario should work closely with their agent and lawyer to ensure they do not inadvertently obligate themselves to two buyers.

Getting a Lawyer Involved Early

Many Ontario buyers and sellers do not contact a real estate lawyer until after the APS is signed. By then, your lawyer can handle the closing — but they cannot undo terms you already agreed to. A lawyer can review an offer or counter-offer before you sign it, flag unusual clauses, explain what you are waiving, and help you decide whether a term is worth fighting for or not. Treadstone Law offers flat-fee real estate services with upfront pricing, so you always know the cost before you commit.

Frequently asked questions