Making a counteroffer (Continued)
This is a continuation from last month’s article, “What A Seller Needs To Know Before Closing.”
To be binding, you must sign the counter offer and deliver it to the buyer or the buyer’s agent.
Once this is done:
- You have REJECTED the Buyer’s original offer. Signing a counteroffer cancels the buyer’s original offer. Your counteroffer is a NEW OFFER. This puts the ball back in the buyer’s court.
- Give the buyer a reasonable amount of time to consider the terms you are proposing.
If the buyer does not respond, the counter offer expires. You have now fallen out of negotiations with that particular buyer. Those negotiations can only be reactivated by the buyer submitting a fresh offer.
What the buyer does next.
When he receives a counter offer, the buyer has three choices:
- Accept the offer. The buyer does this by timely signing the counteroffer and delivering the signed offer to your real estate agent.
- Reject the offer. The buyer can discard your counter offer and take no further action.
- Counter the counteroffer. The buyer can make a second counteroffer, or even a third or a fourth, until you reach a deal.
Multiple counter offers are rare. Most well-advised buyers and sellers reach agreement after one or two rounds of negotiations.
When a Seller should counteroffer.
Your agent handles offers and counteroffers in the regular course of business and will have a good handle on whether a buyer’s offer is reasonable based on the current market.
You, the Seller, have a “price” expectation, and your real estate agent will do his best to meet that expectation. If the offer is clearly unreasonable, your real estate agent will advise you to submit a counteroffer.
If you are selling in a buyer’s market, the buyer may have his pick of suitable homes in your area. Making a counteroffer — even one that seems reasonable — may drive the buyer towards the second home on his list, and you may end up with no deal.
Conversely, in a seller’s market with a shortage of suitable homes for sale, the buyer engage in two to three rounds of counteroffers. In this scenario, the Seller can probably afford to push for your perfect deal.
Your real estate agent should investigate the buyer’s motivation. If the offer is unacceptable and the Seller wants to counter, what type of counteroffer will be best – one that raises the price or one that keeps the price lower but eliminates any repairs or additional costs to the Seller? The net dollar price of the two counteroffers may be the same, but the buyer may find one deal more palatable than the other.
Listen to your Realtor.® If you, the Seller, can live with most of the items in the offer, it would behoove you to take it. Having a willing and able buyer under contract is worth far more than a home sitting on the market waiting for “the perfect offer” to come along.