DEAR BENNY: I saw a property advertised as a short sale for $150,000. I submitted a contract to purchase the property at the asking price. My offer was then countered by the seller/lender with an increase of their price to $175,000. When I expressed surprise to the Realtor, the response was that I should consider the short-sale process as more of an auction, with the initial asking price just a means to get the bidding started. This runs contrary to my understanding of contract law. Please shed some light on this please. --Joseph

DEAR JOSEPH: The law is clear that an advertisement is not an offer, but merely an invitation to make a bid.

Contract law requires three elements: an offer, acceptance of the offer, and consideration.

You made the offer of $150,000. The bank/seller had three alternatives: accept, reject or counter your offer. The bank opted for the latter. Now you have the same three choices.

Once there is an offer that is accepted, there must be consideration to make it a binding, legal contract. Usually, the earnest money deposit, regardless of how small, is that consideration. But, for example, if the seller takes the property off the market, that could also be considered "consideration" even if there is no earnest money deposit.

Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@inman.com.