A lot can happen between an initial offer and the ‘Sold’ sign going up. Meet the counteroffer …
Most Americans don’t have a lot of experience bartering for goods, but it’s one of the most important parts of the home-buying process.
Buying a home is rarely as simple as making an offer and paying that offer out. Negotiations can go back and forth for weeks before the seller and buyer are both satisfied.
The vehicle for this negotiation is the counteroffer — a vital and complex rejection and counter to an offer made by either party.
Counteroffers are typically handled between real estate agents and are time sensitive. Selling or buying a home is more of a process than a transaction, so it’s important to understand counteroffers before you make your first offer.
Why was I countered?
As a home buyer, if you make an offer below list price the seller may choose to reject, accept, or simply let the offer expire. If there are multiple offers, the listing agent will lay out the options for his or her client and then notify all buyers’ agents of the choices.
Sellers may also counter your proposed closing date. If they need to move out quickly, they may want to push it earlier. They may also ask to rent the property for a time after the settlement.
Price and closing date negotiations are common from both parties, but there are even more reasons sellers can potentially get countered.
The condition of the home is likely the biggest factor here. As home buyers conduct ongoing research into the home, any problems with the condition of the house can result in a counteroffer.
If you’ve chosen to take appliances with you when you move, buyers may also look to negotiate for those.
Appraisals are another reason for counteroffers. If an appraisal comes in below the agreed-upon sale price, it will affect the amount the mortgage company will lend to the buyer.
When reviewing a counteroffer, it’s important to have an experienced real estate agentwho can capitalize on your advantages in a negotiation. Both sellers and buyers can take steps to put themselves in an advantageous position through planning and smart counteroffers.
Knowledge is power in negotiations, so try to glean as much information about the seller or buyer as you can. Your agent will also seek information from the other agent on your behalf.
Sometimes sellers use the pending sale of their home to finance another, meaning they have a truncated timeline and could be more eager to make a deal. Similarly, buyers who have terminated a lease may be desperate for a place to live and more willing to negotiate.
If you’re selling a home with known issues, it’s important to anticipate how these problems may put you at a disadvantage during negotiations.
A leaky roof may not be discovered until after buyers order a home inspection. Depending on the cost, they may ask the seller to either fix the roof or deduct the cost of a new roof from the sale price.
These types of issues put sellers at a distinct disadvantage because they have to either pay for repairs, lower the selling price, or reject the counteroffer and hope the next buyer doesn’t notice or care about repairs.
This is why it’s worth the money (around $500) to pay for an inspection before listing a house. Preparation can save you headache and money down the road.
Responding to a counteroffer
If you’ve received a counteroffer as a buyer or a seller, carefully review every aspect. Real estate agents apart from yours are under no obligation to ensure you read the full contract. So make sure you read everything carefully before you sign.
With each individual counteroffer, take into account every aspect of the sale, including old and new information. If you made an offer above the list price, there is always the possibility for an appraisal to come in low.
If you are responding to a counter before an appraisal or inspection, keep those at the forefront of your mind. Prepare yourself for future counteroffers once they are completed.
Whether you’re selling or buying a home, it’s good to establish a baseline where you will walk away from a sale.
As a buyer, you don’t want to spend so much on a home that you move in with no cash for improvements and repairs.
And as a seller, you should have a hard figure in mind of how much you want to make off the sale of your home.
With a measured and informed approach, counteroffers can be your friend. Communicate often with your agent to let him or her know what you want from the sale and never be afraid to walk away if things go south.