Knowing how to counteroffer on a house is a normal part of most real estate transactions for sellers and buyers. In fact, it’s rare for the first offer to be accepted and most homes receive at least two offers.[1] While negotiating may seem intimidating, learning how to counteroffer on a house is a valuable skill that can save you thousands.
The key is knowing how to counteroffer effectively. Whether you’re a buyer or a seller, understanding the counteroffer process can make the difference between a successful deal and a missed opportunity.
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Real estate counteroffer template
Counteroffer letters don’t have to be long or complicated. You just need to make sure to include key pieces of information. Whether you’re a buyer or a seller, here’s a template you can use and here’s an example of a counteroffer for commercial real estate.
[Your Name]
[Your Address]
[City, State, Zip Code]
[Email Address]
[Phone Number]
Date: [MM/DD/YYYY]
To: [Buyer/Seller's Name]
Re: Counteroffer – [Property Address]
Dear [Buyer/Seller's Name],
Thank you for your offer dated [Original Offer Date]. After reviewing the terms, I am submitting a counteroffer with the following adjustments:
- Purchase Price: [New Offer Price]
- Closing Date: [Proposed Closing Date]
- Contingencies: [Include/Remove Specific Contingencies]
- Additional Terms: [Any Other Specifics, such as earnest money or personal property included]
This counteroffer is valid until [Expiration Date and Time]. Please review and respond by that deadline.
Sincerely,
[Your Signature]
[Your Name]
How to counteroffer on a house as a seller
If you’re selling a house and the buyer’s offer falls short of what you’re hoping for, here’s how to draft a counteroffer as the seller.
1. Consider the whole offer, not just price.
While it’s understandable that price is your main focus, you’ll also need to assess other aspects of the offer to see how valuable it is and where it falls short.
- How serious is the offer? A buyer who has been preapproved for a mortgage and is putting down earnest money is much less likely to have their offer fall through. This can be more valuable than a higher, less serious offer.
- What contingencies are they asking for? Inspection, appraisal, and financing contingencies are expected from a buyer. But if a buyer is willing to forego any of them, it could lead to a faster closing, which could be a big benefit to you as the seller and potentially save you money on concessions.
- What’s the proposed closing date? If closing by a specific date is important to you, an offer with a flexible timeline could be enticing.
- Is the buyer asking for concessions? Concessions for closing costs or repairs can dramatically alter whether or not you’ll come out ahead financially.
Evaluating an offer and constructing a counteroffer can be difficult to do on your own and very time consuming. Unless you have a lot of experience with real estate, we recommend talking through the offer thoroughly with your real estate agent to make sure you’re not overlooking anything important.
2. Focus on achieving your primary goals.
Part of navigating a counteroffer successfully as the seller is accepting that you usually won’t get everything you want (unless your house creates a bidding war). Knowing what your priorities are when selling your house will help you draft a counteroffer that is most likely to get you to your goals. For example, your goals may include:
- Getting the highest sale price
- Moving by a particular date
- Avoiding repairs
- Minimizing the amount of time on market
Once you know what your main goals are, you can be firm on what matters the most while being flexible on items that are less of a priority.
3. Be realistic by analyzing comparable sales.
Market conditions play a big role in how you respond to any buyer’s offer. Work with your real estate agent to do a comparative market analysis (CMA), which will show you what similar properties in your area have sold for. This will help you avoid being too firm on a price that’s unrealistic and losing your buyer and also going too low and giving your buyer a better deal than necessary.
4. Draft a strong counteroffer.
Once you’ve assessed the offer, defined your goals, and considered local market conditions, it’s time to draft your counteroffer. Your counteroffer should include the following:
- Sale price: If this is higher than what the buyer is offering, back it up with comparable sales data.
- Negotiable terms: Specify what, beyond the price, you’re willing to offer, including contingencies, repairs, or a revised closing date.
- Firm deadline: You should give the buyer 24-48 hours to respond to create pressure to get a deal done and maintain momentum.
Your counteroffer will be delivered by your realtor to the buyer or their agent. They’ll either accept it, propose their own counteroffer, or walk away.
Seller counteroffer example
A seller lists their home for $400,000. A buyer submits an offer of $360,000, which is 10% below asking price. While the offer is aggressive and lower than what the seller was expecting, the seller counters with $390,000 and agrees to pay part of the closing costs. The buyer agrees, and moves forward.
What worked: The seller didn’t get flustered by the low offer. Instead, they counteroffered with a figure closer to their listing price, but threw in closing cost concessions to show the buyer they were being flexible.
How to counteroffer on a house as a buyer
When buying a house, counteroffering means you’ll be responding to the seller’s counteroffer. The fact that the seller has made a counteroffer means they’re interested, so you have a good opportunity of closing the deal if you’re flexible with some of your terms.
1. Know your budget and stick to it.
It’s easy to get swept up in negotiations and lose sight of how much house you can actually afford. When considering your budget, factor in the following:
- Monthly mortgage payments
- Closing costs and earnest money
- Property taxes
- Home insurance
- Maintenance, repairs, and utilities
- Keeping some cash for an emergency fund
At the same time, it doesn’t always make sense to be overly rigid with your price. For example, increasing your offer by $5,000 to $10,000 can be very persuasive for sellers, but usually only raises your monthly mortgage payments by around $20 to $30.
2. Check similar sales nearby to see how much leverage you have.
Work with your real estate agent to learn what similar properties nearby are selling for. This data will put you in a much stronger negotiating position. If the seller’s counteroffer is much higher than fair market value, you’re in a strong position to negotiate a lower price.
At the same time, nearby sales may show that there’s strong buyer demand, in which case you may have to raise your offer in order to compete.
3. Get creative with what you can offer.
Is there anything you can offer the seller that would be of high value to them but easy for you? During the crazy 2021 real estate market, one Clever employee offered to let the owner still live in the house after closing without paying rent since the Clever employee was living with family and not paying rent either. This was advantageous to the seller because she was prepping for a wedding and had a few months until she could move into her next home.
4. Know that you don’t always have to adjust the price to improve the offer for the seller.
While the price is of course important, there are other factors that can help get your offer accepted. These include the following:
- Offering trade-offs: If you can’t move higher with your price, consider offering to waive contingencies and adjusting the closing date.
- Using the inspection report: If the inspection turns up issues, try to negotiate a lower price or ask for a concession to cover repairs.
- Remaining flexible: Decide what terms you’re willing to compromise on and remain flexible with them in order to secure a deal.
That said, when negotiating make sure you don’t give up too much or expose yourself to unnecessary risk. For example, forgoing the inspection contingency might get you a deal sooner, but it could end up being an expensive mistake if hidden issues with the property are uncovered after you’ve moved in.
Work with your real estate agent to negotiate in a way that protects you while getting you closer to a purchase. An experienced realtor will know what items are most likely to sway sellers in your market, putting you at an advantage over the competition.
💸 Get a better deal by working with a real estate agent. Clever can connect you with top local realtors who can help you negotiate a better deal, while saving you money through reduced listing fees and cash back. Find out more.
Buyer counteroffer example
A house is listed at $200,000. The buyer offers $180,000 with a 60-day close and standard inspection and financing contingencies. The seller counters at $195,000 and asks for a 45-day close. The buyer then issues a counteroffer: $188,000, agreeing to the 45-day close but keeping all contingencies in place. The seller accepts this revised offer, and the deal moves forward..
What worked: The buyer demonstrated seriousness by responding quickly with an offer that was reasonably close to the listing price. They also showed flexibility on the closing timeline and upped their price, which mattered to the seller.
What is a reasonable counteroffer on a house?
For buyers, a reasonable counteroffer price is usually around halfway between the seller’s counteroffer price and your initial offer. Your initial offer will typically be around 3-10% below asking, although this varies a lot depending on the local market. Offering 15% or more below market value risks getting your offer rejected outright.
For sellers, the first counteroffer price should be around halfway between your list price and the buyer’s offer. Again, this is just a rule of thumb and doesn’t apply in all markets. You also don’t have to keep coming down in price. Consider offering something else, like repair or closing fee contingencies.
Why would you need to counteroffer?
Sellers and buyers send out counteroffers for various reasons, such as to increase or decrease the sale price or adjust the closing date. Other reasons include the following:
- Boost the earnest money deposit.
- Modify the contingencies.
- Exclude or add personal property to the contract.
- Pay for more of the closing costs.
- Increase the sale price.
- Mitigate risks, such as asking for an extended home inspection period or proof of financing.
The art of negotiation is tricky, which is why it's often best left to the experts. Experienced real estate agents are expert negotiators, ensuring you receive the best possible price without jeopardizing your sale. They will still consult you heavily during the negotiation process, but they can structure and communicate more strategically to make sure you get what you want.
How likely are buyers to receive a counteroffer?
The likelihood of a buyer receiving a counter depends on several factors, including:
- Whether the market where you want to purchase is a buyer's market or a seller's market.
- How long the home has been on the market.
- Whether your offer comes close to the seller’s expectations.
When countering, each offer should present a price closer to what the other party wants, or include concessions to compensate for desired sale price differences. Each party will use their realtor for advice at every stage to determine the proper next step.
FAQs about how to counteroffer on a house
Should I counteroffer as a seller?
If you’re worried about losing the offer and worried another one might not come along, then you might not want to counteroffer. Counter offering as a seller is a normal part of most real estate transactions, but you have to decide what feels comfortable for you. You can counter the offer in order to get a higher price, boost the earnest money deposit, modify the concessions, or mitigate risks through contingencies.
What is a typical counter offer in real estate?
A typical counteroffer is highly dependent on the market. As a rule of thumb, your counter offer as a seller should be halfway between your list price and what the buyer is offering. However, you can negotiate other terms—like contingencies and closing date—if you don’t want to move too much on price.
When should you accept a counteroffer?
You should accept a counteroffer if you’re comfortable with the offer terms that are most important to you. Typically, this includes the sale price, contingencies, and closing date. You may also want to accept a less desirable offer if you don’t want to lose the sale, such as if your home has been on the market for a while.
How long do you have to make a counteroffer?
You should respond to an offer as soon as possible. Be prepared to move quickly, as offers expire, typically within 24-48 hours. Work with your realtor to make a counteroffer quickly while protecting your interests.