How Does A Real Estate Counter Offer Work? All You Need to Know

Got Low-Balled?

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.

Avoid knee-jerk reactions, and don’t take anything personally

When you get a counter offer, your first instinct may be to immediately reject or accept it outright. But, if you have a little time to respond — go ahead and take a walk or sleep on the decision. It may be just what you need to get clarity on the best way forward. And while it feels personal to have your offer rejected, try not to take it to heart. The seller may have a few offers or simply wants a better deal. At the end of the day, it’s just business.

Source: (Daniil Kuželev / Unsplash)
Source: (Daniil Kuželev / Unsplash)

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How does making a counter offer on a house work?

After the counter offer is submitted, the buyer may come back with a counter offer to the seller’s counter offer. There’s no limit to these negotiations, so this back-and-forth continues until the sale terms are agreeable to both parties—otherwise, there’s no firm deal.

Counter offers are a standard part of any deal, but that doesn’t make them any less stressful to navigate.  

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:

  1. A seller lists a home for $300,000.
  2. A potential buyer makes a counteroffer for $275,000.
  3. The seller doesn't like that lowball offer, and counters with $290,000.
  4. The buyer submits a counter offer of $280,000.
  5. The seller presents a counter offer of $285,000.
  6. 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.

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 and 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 expiration dates, so be sure to make note of yours when deciding how to move forward.

Who Has More Leverage?

Ready to play hardball? Hold up, slugger. First, you have to consider your position on the field. How much negotiating power do you really have? The answer depends on several factors.

A lot depends on your local market conditions. If you’re in a buyer’s market — meaning the supply of homes exceeds demand from buyers — you may have to make some concessions to secure an offer. If you’re in a sellers’ market —  and homes are flying off the proverbial shelves,  selling at or above list prices — you may be able to persuade a buyer to offer more money for the house, for instance, or to let go of some contingencies (aka provisions that must be met for the transaction to go through).

Your timetable will also impact whether you have the upper hand. If you’re not in a rush to sell, you may be free to negotiate more aggressively. If you’re in a time crunch because, say, you already bought your next home and don’t want to pay two mortgages at one time, your hands may be tied.

In any case: Confer with your agent. They can help you objectively assess your position and determine the right negotiating strategy.

When Should I Accept A Seller’s Counter Offer?

As the buyer, when should you decide to accept a seller’s counter offer? An offer may only go on the table for 24 hours or less in a hot real estate market. It’s important to know where the housing market stands – i.e., whether your area is in a seller’s or buyer’s market – to get a head start on the competition.

Keep in mind that, if you’re countering, you’re not yet in a contract – and the seller could get another (better) offer while you’re still going back and forth. The buyer and seller can work through negotiations until reaching an agreement, but it becomes legally binding when they sign the offer.

You should review the following factors before you accept a seller’s counter offer:

  • Contingencies, which refer to requirements that must be met for the sale to go through
  • Sale timeline
  • Whether the seller’s counter offer fits into your budget
  • Whether you understand all parts of the offer

Once the counter offer has been accepted, the buyer and seller then sign a contract. The buyer must secure financing, and the seller must complete any repairs stated in the agreement.

Counter the Occupancy

If you want to sell your home, you have to be prepared to be flexible in terms of the timing. You have to be willing to give up on your schedule, if that’s what it takes to make the deal.

Reasons You’ll Likely Face a Counter Offer

A counter offer may include explanations of the terms of the offer or requests for additional information. Finalizing counter offer negotiations requires the buyer and seller to accept the terms with no other conditions or modifications.

Negotiating in real estate is a process that could go on for weeks or even months. There is no limit on the number of counter offers that can be submitted back and forth during negotiations. When countering, each offer should present a price closer to what the other party wants, or with concessions to make up for money. Each party will use their realtor for advice at each stage, determining the proper next step.

Common negotiating tactics for buyers when producing counter offers include:

  • Boost their earnest money deposit
  • Change service providers
  • Modify contingency time frame
  • Alter closing date or possession date
  • Exclude or add a personal property from the contract
  • Agree to an early release of deposits
  • Pay for more of closing costs
  • Increase sale price

What Should You Do If the Seller Rejected Your Counter Offer?

It is not required that sellers reject an offer in writing. The listing agent might choose to tell the buyer’s agent that the seller isn’t going to respond because the offer isn’t acceptable. The seller can also return the offer writing “rejected” across the face with the date and their initials, and there is often also a spot where sellers can deny the offer on the contract.

During this stage of buying a home, your best resource is your real estate agent. They will be able to talk to the seller’s agent and find out what it is that the sellers find most important about the home sale. They might not want to make repairs, they might be firm on their price, or they might have a move out date that is set.

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.

Keep in Mind What You Can Afford

In addition to the pre-approval letter from your lender, you should know before you make an offer what you can realistically afford to keep a home and your finances in order.

Remember that a mortgage isn’t the only expense of homeownership. Other expenses include homeowners insurance, interest, taxes, maintenance costs, utilities and unexpected repairs.

When you’re negotiating for a home, stick firmly to a price point you know you can afford.

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

Can You Withdraw Your Counter-Offer?

If you are making multiple counter offers at a time, you don’t want to counter anything in writing but you do want to send out a multiple-offer disclosure. Counter offers, instead, are made verbally.

This way, the first buyer who gets back to you with terms you like can enter a contract with you.

Basically, this means that you can withdraw a counter offer. But, the counter should be verbal and not written and you should make sure that your agent is doing everything right to allow you that option.

(Are you wondering whether you can sell your house without making any repairs or changes? Learn about selling your house as-is here.)

4. Know when to walk away

Understanding that you won’t get everything you want is part of a real estate deal. Set realistic expectations and expect to make compromises in order to close.  

That being said, sometimes you may have to walk away. If you can’t get on the same page about your deal-breakers, it may be time to move on. If it has been an extended negotiation, this can be challenging, but necessary. 

As a seller, you must remember how much you want to make from the sale. As a buyer, you can’t afford to overspend. Establishing a hard minimum or maximum purchase amount will ensure you don’t come up short.

Negotiate With the Market in Mind

How you negotiate the seller’s counter offer will also depend on the type of market you’re in. Do you know if the seller has multiple offers on the house? If they do, you need to tread carefully. If you’re offering a lower amount and asking for a lot of contingencies, the seller could take another offer over yours.

Here’s a real-life example for you:

When we sold our home in Texas, my wife and I were lucky enough to get a handful of offers within the first ten days. One of the buyers requested $6,000 in closing costs, while the others did not. They were also offering $15,000 less than our asking price (and the house was competitively priced to begin with). We ignored these buyers with good reason. They asked for too much and offered too little. We made a counter offer to another buyer for the full asking price. They accepted, and that was the end of it.

When you negotiate the counter offer with a seller, you have to be reasonable. It’s not personal. It’s just business. Both parties want something out of the deal, so both parties have to be willing to bend.

In a buyers market, you have much more leverage in terms of the purchase agreement. If the seller hasn’t received a single offer in over three months, they will be more willing to negotiate with you. They may accept a lower sale price, a shorter escrow period, or even a contribution to your closing costs. They might not even make a counter offer back to you. They might simply accept your initial offer as-is.

In a seller’s market, where homeowners are likely to receive multiple offers, you need to be careful what you ask for. In this type of market, the seller’s counter may come with an unofficial "take it or leave it" clause.

So it all comes down to the type of market you are in, and the amount of leverage you have. And this is where your real estate agent’s experience will prove invaluable.

This article explains how to negotiate a counter offer when buying a home. If you would like to learn more about this stage of the home-buying process, you can use the search box at the top of this website. We have articles that cover every step of this process. So you are bound to find information you need.

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