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How to Make a Successful Real Estate Counter Offer

What you'll learn: The ins and outs of counter offers

EXPECTED READ TIME: 8 MINUTES

Sometimes selling a home can be uncomfortable, especially for those that don’t like negotiating, but you can be much more successful if you do negotiate. Not negotiating means you are leaving money on the table with people you will never see after the closing. A counteroffer allows you to secure the price you want on your terms and see if the buyers are serious.

Several items can be negotiated with counteroffers from the final price, dates, closing costs, and window treatments. Let’s take a look.

What is a Counter Offer in Real Estate?

A counteroffer comes into play in the home buying/selling process when a homebuyer makes an offer on a home, and the seller wishes to make changes to the proposal to fit their sales goals.

The seller can choose to ignore, accept, reject or counter the initial offer. At this point, the potential buyer now has the opportunity to accept, reject or counter the seller’s counteroffer.

Both sellers and buyers will use the counteroffer to negotiate for the best price and terms possible. It helps to look at a few counteroffer examples.

Real Estate Seller Counter Offers

There are several items on a real estate contract that you can counteroffer. Here are a few examples of the things and the reasons you may want to counter.

  • You would like to raise the sales price closer to what was provided in the original offer (this is the most common and used if you require a minimum price for your sale).
  • You want to request a higher earnest money deposit. This can be a bit of insurance that the deal will not fall apart.
  • You wish to change the closing date. Suppose the offer’s closing date is too soon or too far away. You may need to close soon so that you can buy your next home without a bridge loan, or you want to have time to find a new home, or the closing for a new home is already planned, but it is a long time in the future.
  • The buyer has requested some contingencies that you cannot accept or fulfill.

How to Counter Offer as a Buyer

After you have made your initial offer, you may receive a counteroffer that you again want to counter. There are several reasons you may not want to accept the seller’s counter:

  • They want you to cover all of the closing costs.
  • Your original price offer was rejected, and the counter was out of your budget.
  • The contingencies and closing date do not work for you due to a prior home sale.

The likelihood of receiving a counteroffer from the seller will depend on the market, whether it is a buyer’s or seller’s market, the length of time the home has been for sale, and how close your initial offer was to the listing price.

Show your intent with the counteroffer – You want to communicate that you are serious, and this can include an increase in the earnest money deposit. It makes the offer more attractive and can be sufficient to conclude the sale sooner.

Counter Offer Example

There are standards for a buyer counteroffer, and each state will be slightly different, so know what is needed and sign the counteroffer, so that it can be accepted immediately.

If you can, learn what the other side wants; points, a quick close, paying closing costs. Don’t get emotional. If you are too invested, you lose your bargaining power and be willing to move on to the next deal. Buyers should include an “escalation clause” in hot markets, where you will pay X more than the highest offer up to a defined value. You can negotiate by phone, email, or through realtors before submitting a counteroffer. This gives you time to find an amicable conclusion for both of you.

Here is an example of a counteroffer for a home listed at $400,000.

  1. The buyer submits their offer for $380,000, and they want to have the closing within 30 days but request that the seller pay the closing costs.
  2. The seller counters with a price of $390,000, and they have requested that the closing is in 40 days. They are also unwilling to pay the closing costs.
  3. The buyer accepts all of the terms of the counteroffer, paying $390,000, covering the closing costs and a 40-day close.

The buyer could have again countered with the same or lower price or a change in the closing costs or closing date, possibly requesting something else. However, the $10,000 below the listing is more than the closing costs will usually be, and these costs can be included in some mortgages anyway. If all is within the budget, closing the deal may be the best choice.

What Happens if Buyer Does Not Accept Counter Offer?

The counteroffer voids the original offer, releasing them from an obligation. If they reject, there is nothing you can do. But, some buyers may be willing to negotiate more after a rejected offer. How they are approached will determine if they are open to options, your realtor can help with this post-rejection situation, but there are no guarantees.

How Many Times Can You Counter Offer on a House?

Counteroffers have no limits, and buyers that are interested will often counter several times, but you always risk the chance of rejection and losing the deal. If the price or the closing date is the sticking point, then the counteroffer will reflect this. Also, if the home inspection has been completed and problems were discovered this might be addressed in the counteroffer.

How to Reject a Real Estate Counter Offer Politely

Some buyers will make lowball offers. Don’t be insulted. It’s your home, but they are trying to get the best deal they can. You can respond through your real estate agent, crafting a strategic counteroffer that you think will work. If it is too low, then you don’t have to respond. They may come back with a second offer. If you have no other offers on the table, you may want to consider the second offer more seriously.

Remember, if you make a counteroffer, you are legally bound to it.

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