Content of the material
- Got Low-Balled?
- FAQ: Real Estate Counteroffer
- Can sellers make counteroffers with multiple buyers?
- When should I walk away from a real estate negotiation?
- Quick Tip: Expect a lot of back and forth. Everything in real estate is a negotiation
- What is a counter offer?
- Definition of Multiple Counter Offer
- How many counter offers are normal?
- What is a counter offer in real estate?
- Sale price, the most frequently contested item in a counter offer:
- Closing costs, which a buyer will sometimes request that the seller cover at least in part:
- Closing date, to specify the timeline from the purchase contract through the final signatures:
- Earnest money deposit amount, or how much the buyer will put down immediately after signing the contract:
- Any buyer-requested contingencies, such as financing or a home inspection.
- Related Resources
- What Are Seller Concessions?
- Home Appraisal Tips For Buyers, Sellers And Refinancers
- Home Buying Checklist For First-Time Home Buyers
- Can a seller accept another offer during counter offer negotiations?
- How Is a Counteroffer Rejected?
- 5. Agree to Pay Closing Costs
- Are You Ready to Sell Your Home?
Rather than get indignant, evaluate the offer holistically. Maybe the closing date trumps the money. If the offer’s really out of touch, your agent can ask the buyers for their reason, which may provide intel about your home.
FAQ: Real Estate Counteroffer
Let’s take a look at answers to common questions about real estate counteroffers.
Can sellers make counteroffers with multiple buyers?
State laws vary on whether a seller can participate in more than one sale negotiation at a time. Ask your real estate agent about the laws in your particular state. Sellers should not make several counteroffers at once. Not doing so benefits all parties involved.
When should I walk away from a real estate negotiation?
Buyers or sellers should not feel obligated to continue negotiations if they don’t feel comfortable with the sale price or agree with the terms of the counteroffer, such as waiving the home inspection contingency.
Other red flags that buyers should recognize as signs to walk away from a real estate negotiation include:
- The appraisal comes in lower than what you’ve offered.
- The home inspection reveals some major problems with the home.
- Someone else lays claim during a title search.
- It’ll cost a lot of money to insure.
- The deed restrictions are difficult for you to navigate.
Here’s an example of a typical offer/counteroffer negotiation on a home listed for $250,000.
- The buyer initially offers $240,000 with closing in 30 days. The buyer also asks for the seller’s furniture and for the seller to pay closing costs.
- The seller counteroffers with a price of $245,000, but does not agree to pay closing costs. However, the seller agrees to throw in the furniture. The seller also wants to close in 40 days.
- The buyer accepts the seller’s counteroffer, agreeing to the price of $245,000 and agrees to the 40-day period to close.
Quick Tip: Expect a lot of back and forth. Everything in real estate is a negotiation
It’s not just the counter offer…Post-inspection updates and repairs. Closing costs. The counter offer is just the kickoff for a long series of negotiations, where you’ll need to know when to stand firm or walk away.The good news: You’re not the one who has to negotiate.Unless you have a good bit of experience in selling homes, this is where your real estate agent earns their keep. Just make sure your agent is a full-service agent who will be by your side through closing.And like we said, EVERYTHING is a negotiation.At Clever, we offer a free service that negotiates with real estate agents, so you get full service locked in at a lower rate. We’ll bring you top-rated local agents. And since we can bring them more business, they agree to lower your fee.
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What is a counter offer?
Whether you’re buying or selling a house, you need to know about counteroffers. When a buyer makes an offer on a home, the seller can make a counteroffer. The counteroffer makes changes to the original offer. In other words, a counter offer in real estate is a negotiating tactic in response to the initial offer.
When a counter offer is made, the original offer is then void.
If a seller wants to make changes to an offer they received from a buyer, the counter offer typically changes: 1) the sale price, 2) the timeline (for financing and/or the closing date), 3) inspection requirements, and/or 4) the “conditional” agreements within the offer. (For example, the seller making a repair before closing, or the offer being contingent on the buyer selling their current home.)
The seller’s counter offer is then presented to the buyer. The buyer can choose to: 1) accept, 2) decline, or 3) counter the seller’s counter offer.
There is a time limit for how long the seller or buyer has to sign, decline, or counter the counteroffer (usually 24 hours).
Theoretically, the buyer and seller can go back and forth with counter offers until they reach an agreement. When the buyer and seller both sign the offer, it becomes a legally binding purchase agreement.
Definition of Multiple Counter Offer
When a home seller receives multiple offers to buy his home, rather than accepting the best offer, the seller may decide to send a counteroffer or a multiple counter offer as a response. If more than one purchase offer is countered, the counter is a multiple counter offer and is different from a counteroffer made to a single offer. Our local Association of Realtors has standard forms which are normally used by the seller.
How many counter offers are normal?
When it comes to counter offers in real estate, there's no set number that constitutes the norm. A buyer and seller could go back and forth with one or many. But in most cases, there are only so many counter offers a potential buyer and seller will make before a real estate transaction just falls through.
Here's how a hypothetical series of counter offers might play out:
- A seller lists a home for $300,000.
- A potential buyer makes a counteroffer for $275,000.
- The seller doesn't like that lowball offer, and counters with $290,000.
- The buyer submits a counter offer of $280,000.
- The seller presents a counter offer of $285,000.
- The buyer agrees to that compromise, and both parties move forward with the purchase contract.
One thing to keep in mind is that real estate offers — including initial offers and counter offers — typically have time limits. Whether you're a buyer or a seller, you can't just sit on a counter offer. You need to respond quickly.
What is a counter offer in real estate?
Once the buyers of your house have made a purchase offer, you’re dealing with one of three cases:
- You accept the offer with no changes or conditions
- You present a counter offer
- You reject the offer and move forward
A counter offer will just about always touch on three main overarching factors: price, convenience and timing.
“It’s going to always be give and take with those three aspects of the contract,” says David Magua of Florida-based Keyes Company, who has more than two decades of experience.
“You’ve also got to take comps into consideration, things like do they have a concession for the roof, the plumbing, buyer’s closing costs. … so that when they make that counter to the buyer, they’re comparing their property to other comparables recently under contract or (sold).”
A seller’s counter offer typically specifies changes to at least one of the following:
Sale price, the most frequently contested item in a counter offer:
Sellers typically shift this in one of two directions: countering with their original asking price or presenting a price between the buyer’s offer and that original asking price.
That first instance indicates a lack of willingness to negotiate on price—but the second case is a green light for negotiations. At that point, a buyer can either go with the proposed price or counter with another that is more acceptable to them.
Closing costs, which a buyer will sometimes request that the seller cover at least in part:
This sometimes works in a buyer’s market, but a seller may come back with a simple no or agree to contribute a certain amount toward closing costs, meaning that the buyer will be financing his or her costs through their mortgage loan.
Closing date, to specify the timeline from the purchase contract through the final signatures:
For example, if the original offer specified a closing date 45 days from acceptance and the seller needs more time to vacate the home, they may present a counter proposing a longer escrow period to allow them the time to make their move. From there, the buyer can either accept or refuse.
Earnest money deposit amount, or how much the buyer will put down immediately after signing the contract:
This is a way for the buyer to show you the money and make their intentions to purchase your home clear. Keep in mind that, from the seller’s perspective, a larger deposit is preferred over a smaller one because it indicates a buyer is serious about following through.
Any buyer-requested contingencies, such as financing or a home inspection
Some contingencies are standard (inspections, appraisals, title, and financing) and a seller won’t typically fight them unless they’ve got all the leverage.
A longer shot is the buyer making the purchase contingent based on the sale of their existing home—this is a fairly common contingency but more likely to be negotiated. One counter to the “sale of existing home” contingency is for the seller to add a kick-out clause to the contract. This gives a real estate agent the right to continue to show the property thus making it more likely that the house will sell.
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What Are Seller Concessions? Home Buying – 7-Minute Read Victoria Araj – March 09, 2022 Seller concessions can help reduce your closing costs, but is it a reasonable request? Learn when it’s a good idea to ask the seller to pay up. Read More
Home Appraisal Tips For Buyers, Sellers And Refinancers Home Buying – 5-minute read April 05, 2022 Appraisals are almost always a required part of the home buying and refinancing process. Let’s look at what an appraisal is and review some tips that refinancers, sellers and buyers can use for the inspection. Read More
Home Buying Checklist For First-Time Home Buyers Home Buying – 7-minute read February 26, 2022 Ready to buy your first home? We’ve created a checklist so you don’t miss a single step in the process. Read More
Can a seller accept another offer during counter offer negotiations?
The world of real estate is guided by contracts. A Realtor can accept another offer while the buyer is thinking about the counter offer. However, it comes down to the nature of the counter offer contract.
For instance, if the seller had sent the buyer an irrevocable counter offer giving them three days to accept or reject it, then they cannot accept another offer until the stipulated three days are over.
If the buyer signs and accepts the offer before this period is over, the seller cannot back out because they run the risk of being under contract to sell the property to two different buyers. Also, if they accept another offer after the counter offer has been signed and accepted, the first buyer has the right to:
- Put a lien on the home
- Sue the seller
- Coerce the seller into completing the sale
Note, the Realtor may even sue the seller if they try to back out from one offer to another since they will be missing out on potential commission from the sale.
However, there are several loopholes a seller may exploit to back out of a legally binding counter offer contract, so they can accept a better offer. These include:
- Buyer requested contingencies: if the buyer plans on selling their home first before purchasing the new one, the seller may have the right to terminate the contract if they get a better offer
- Missed deadlines: real estate home buying contracts feature a long string of deadlines for the buyer. If a buyer misses out on one of these deadlines, the seller can use this as a loophole to back out and accept a better deal from another buyer
How Is a Counteroffer Rejected?
Sellers can accept, reject, or make a counteroffer to any bid they receive.
If they do opt to reject an offer, there is often a spot near the bottom of the contract form where they can initial that the offer has been rejected. They also might choose to write "Rejected" across the face of the contract then initial and date it. Sellers (or their agents) can also reject an offer orally.
Sellers also have the right not to respond at all. The listing agent can email the buyer's agent to communicate the fact that the seller will not respond because the offer is unacceptable, but sellers generally aren't required to formally reject an offer in writing.
All offers and counteroffers include an expiration date, so be sure to make note of yours when deciding how to move forward.
5. Agree to Pay Closing Costs
It seems like it’s become standard practice for buyers to ask the seller to pay their closing costs. These costs can amount to about 3% of the purchase price and cover what seem to be a lot of frivolous fees. Buyers are often feeling cash-strapped from the down payment, moving expenses, the prospect of redecorating costs—and maybe even from paying the closing costs on the home they sold. Some buyers can’t afford to close the deal at all without assistance for closing costs.
While many buyers don’t have or don’t want to spend extra cash up front to get into the home, they can often afford to borrow a little bit more. If you give them the cash they want for closing costs, the transaction may be more likely to proceed.
When a buyer submits an offer and asks you to pay the closing costs, counter with your willingness to pay but at an increased purchase price, even if it means going above your list price. Buyers sometimes don’t realize that when they ask the seller to pay their closing costs, they’re effectively lowering the home’s sale price. As the seller, of course, you’ll see the bottom line very clearly.
You can increase your asking price by enough to still get as high as your list price after paying the buyer’s closing costs. If your list price is $200,000, and the buyer offers $190,000 with $6,000 toward closing, you would counter with something between $196,000 and $206,000, with $6,000 for closing costs. A catch is that the price plus closing costs must be supported when the home is appraised; otherwise, you’ll have to lower it later to close the deal, because the buyer’s lender won’t approve an overpriced sale.
Are You Ready to Sell Your Home?
Selling your house can feel like a never-ending process. First, you have to get your house ready for the market by cleaning, painting, landscaping, and making repairs. Your home will likely be staged for photographs and showings, and your life is constantly interrupted by people viewing your home.
You’d think that it would be smooth sailing once you get an offer on your house, but unfortunately, that’s far from true. Once you get through the negotiation process and accept an offer, there are many more steps before the sale is final.
Understanding the answer to questions like “how do counter offers work in real estate?” can help you get a sense of what it’s like to sell a home. For people who aren’t interested in this lengthy endeavor, there is another option.
Selling to an iBuyer is a quick, stress-free process. If you don’t want to deal with the normal headaches of selling a house, this is a reasonable path to consider. You can find out the real value of your home and get a no-obligation cash offer here!