The Right of First Offer Form [Form 1.6] is an agreement between a landowner and a prospective buyer. It is not an amendment to a sale agreement, nor is it anything like a back up offer. Rather, a Right of First Offer is a reservation that the Buyer pays for. By giving the landowner some amount of money, the buyer essentially reserves the right to be the first accepted offer on the property. These rights are reserved before the property is even marketed, when the landowner isn’t even a seller yet. It’s worth reiterating: the Right of First Offer is used on property that is not even being marketed yet.
In the act of reserving the first offer right, the Buyer gives the landowner (1) an amount of money, and (2) a fully-filled out, but unsigned purchase agreement; with all of the terms Buyer wants in the offer. If the landowner accepts the money and the right of first offer, the landowner is agreeing that any time they plan to put the property on the market, they will first sign the buyer’s pre-drafted purchase agreement and send it to Buyer for first consideration [in effect, the Seller will be making an offer to the Buyer]. If the Buyer still wants to go through with the agreement, the Buyer will sign the offer and the parties will be under contract. In essence, it’s a Buyer paying to write the Seller’s offer, with a requirement that the Seller present that offer to the Buyer.
It’s a way for the Buyer to pay to reserve land while it’s off market; if the market takes a turn for the better, Buyer may be getting a good deal on the land, if the market takes a turn for the worse, the Buyer can refuse to sign the first offer agreement and simply be one of the buyers making an offer on the property after Seller lists it.