It starts with a seller putting his or her house on the market. The buyer makes an offer. Now the seller has the right to accept it or to make a counteroffer. And so the games begin…
The likelihood of you receiving a counter depends on several factors. These include whether your local market is skewed in favor of buyers or sellers, how long the home has been on the market, and whether your offer comes close to the sellers’ expectations.
The options you have are to accept the offer as presented, decline the offer, or offer a counter offer to close the gap between the asking and offering price. The art of negotiation is tricky. Make sure you have a trusted real estate agent on your side from step one!
What Is A Counter Offer?
A counteroffer is an offer given in response to a proposal that implies a rejection of the original offer. In other words, it turns the tables–now it is the original offerer who now has three options. The seller faced with the counter offer can 1.) accept it, 2.) issue another counterproposal, or 3.) reject it. It is important to note that no one can create a binding contract until one party agrees with the other’s offer.
Reasons Why You’ll Likely Face A Counter Offer
A counter offer may include explanations of the terms of the offer or request for additional information. Finalizing counteroffer negotiations requires the buyer and seller to accept the terms without any other conditions or modifications.
Negotiating in real estate is a game that could go on for ages. There is no limit on the number of counter offers that can be submitted back and forth during negotiations. When countering back and forth, each offer should present a price, which is less than the previous offer. This conveys to the buyer that the seller is making a final offer.
Typically an offer states that the seller has accepted the buyer’s offer if they meet the following conditions:
- Are willing to boost the size of the earnest money deposit
- Change service providers
- Modify contingency time frames
- Alter closing or possession date
- Exclude or add a personal property from the contract
- Agree to an early release of deposits
When To Accept The Counter Offer
If the seller issues the offer, the buyer can accept the counteroffer. You should be ready to move as swift as a fox in this situation because counter offers tend to contain an expiration date, just like purchase offers. This means the seller can accept another offer while the buyer is deciding to sign the counter offer or not.
When people hear “We have a counter out” they feel uneasy. The news can be discouraging, but it’s also a chance to snatch homes right out from under the noses of competing buyers by immediately submitting an offer from a buyer while the counter “was out.” What happens next is the seller accepts the second offer which crosses the counter offer from consideration. The first potential buyer is out of the game. When you hear a counter is out, offering the listing price is a safe way to slide into the game.
As you review the offer, you must remember that there are several factors besides price that could be undesirable. When considering making a counteroffer, never let emotions affect negotiations. Now is the time to be bold. Ask questions, do personal research, and take a bit of additional time to review the new offer.
Here is an example. Say there is a house going to $200,000. A buyer comes along and decides to offer $180,000. The seller provides a counter offer of $190,000 in attempts to obtain a higher price. The buyer chooses to accept. The sale moves forward.
What To Do If Your Counter Offer Is Rejected
There are a few reasons to reject an offer. Many purchase contracts provide a spot near the bottom for the seller to initial that the offer has been denied. Sellers can also write “rejected” across the face of the contract, initial and date it. Usually, an offer will specify a date of expiration of the offer in the event the seller decides not to respond. The listing agent can email the buyer’s agent to communicate the fact that the seller will not respond because the offer is unacceptable. However, sellers are not generally required to reject an offer in formal writing.
What do you do if the buyer at first rejects the offer, but later changes his mind and wants to accept the offer? The original offerer can just choose not to take the offer. Therefore the offeree must present a new counteroffer or move on.
Here is a different scenario. Imagine the same house is selling for $200,000, and the buyer offers $180,000. The seller decides to decline and provides a counter offer of $190,000. The buyer can choose to accept, counter, or withdraw. They are in no way obligated to purchase because they made an offer. However, if the seller decides to take the counteroffer, you are likely legally bound to go through with the deal. So you must be entirely sure you are comfortable with your offer.
Your best resource during this stage of buying a home is your real estate agent. Ask your real estate agent to talk to the listing agent and found out what is most important to sellers–such as, the move out date, the price, or perhaps avoiding having to make repairs. You want to tailor your offer so that it’s acceptable and attractive to the seller. The more you know about the sellers’ motivations, the easier that will be.
Navigating the negotiation process isn’t easy without an experienced real estate agent. That’s why we created Clever. Clever uses top local real estate agents to help you save money and make the process smooth sailing. Call us today at 1-833-2-CLEVER or fill out our online form to get started.