When a seller responds to a purchase offer, they may accept it or reject it in entirety, or they may submit a counter offer. Real estate counter offers allow sellers to make a revised offer, often proposing a different price or contingency terms.
Use this guide to learn about counter-offers in real estate, including why sellers make a counter offer, what to expect during the process, and how to efficiently negotiate a sale with local agents. We’ll also review how cash buyers make the home sales process easier and more convenient for all parties involved.
Offers in Real Estate
A written offer starts the real estate transaction process. An interested buyer submits a written offer listing the terms of the contract sales agreement. If you’re wondering about response deadlines, check out how long a seller has to respond to an offer. A typical real estate offer includes the following components:
- Purchase Price: The purchase price is the sales price the buyer is willing to pay for the property. This may be equal to the asking price, or it could be higher or lower.
- Closing Date: The closing date is an estimation of when the buyer expects to close, based on appraisal, inspection, and financing requirements.
- Contingencies: A purchase offer includes requested contingencies. For example, the buyer may list that the offer is based on their ability to obtain financing.
- Other Terms and Conditions: The offer may include other components, such as the earnest money deposit expectations. Some offers include more complex conditions, like a kick-out clause.
The seller may accept or decline the buyer’s offer. They may also respond with a counter-offer instead, which opens the transaction up to future negotiations.
What is a Counter Offer?
A counteroffer is an edited offer from the seller. It rejects the buyer’s initial offer and notes the proposed changes that would lead to their agreement to enter into a contract. The counteroffer voids the initial contract and provides the intended buyer with a new offer.
The buyer can decline the counteroffer, either submitting another offer or walking away from the sale completely. The interested buyer can also accept the new counteroffer and enter into a sales contract with the seller.
Why Sellers Make Counter Offers
A seller may make a counteroffer for a number of reasons. Price disagreement is among the most common reasons for a seller’s counter-offer. A seller may believe their property is worth more than the original offer and may submit a counteroffer at a higher price.
Less-than-favorable terms could also lead to a real estate counteroffer. For example, the seller may want to negotiate contingencies. Additionally, the seller may reject certain requests in the initial offer, such as paying a portion of the buyer’s closing costs.
Seller counter-offers are also common in highly competitive markets, especially when sellers receive multiple offers on a property. The seller may notify the buyer of the various offers and allow them to resubmit one with a higher sale price.
The Counter Offer Process
Counter-offers are common in real estate and may involve the following steps.
Negotiation
A counteroffer can begin the negotiation process, which is when buyers and sellers negotiate back and forth to reach an agreement on the terms of a sale. The number of counteroffers possible during the negotiation process is unlimited. However, the seller or buyer may choose to walk away during the process.
Real estate agents can help reduce the number of counteroffers by discussing potential terms with each other before submitting a written contract. For example, the seller’s agent might discuss a higher price with the buyer’s agent before submitting a written contract.
Buyer’s agents can also contact the listing agent to determine the current best price offered. Although every seller should learn more about realtors before deciding whether or not to hire one.
Acceptance
The purchase agreement becomes legally binding if the seller or buyer accepts a real estate counteroffer. Both the seller and buyer must sign the agreement to accept a counteroffer.
Rejection
A counteroffer can be rejected by the seller or buyer, voiding the contract. Other buyers are then free to view the property and submit an offer.
New Counter Offer
Real estate negotiations can be lengthy, and it’s not uncommon for new counteroffers to be submitted before both parties can reach an agreement. Even after the seller makes an initial counter-offer, the other party can respond with another counter-offer. The process may continue until either party walks away.
What Buyers and Sellers Should Know About Real Estate Transactions
A real estate transaction should be a mutually beneficial agreement, meaning both the seller and the buyer benefit from the sale. Understanding the counter-offer process helps ensure a smooth transaction.
Analyzing the Counter Offer
Counteroffers are just as important as the initial offer, meaning they should be reviewed in detail before acceptance or rejection. Before proceeding, review all contract components, including the purchase price, contingencies, closing costs, and closing dates. Once a counteroffer is signed, the contract is valid.
Negotiation Strategies
When you respond strategically, you can increase your chances of a signed purchase agreement, putting you one step closer to your dream home. Here are a few tips for effective negotiation:
- Understand Your Priorities: Understanding your selling or buying priorities can help with the negotiations. Determine if and under what conditions you will accept a lower price. If you’re the seller, determine if you’re okay with contingencies. Some, such as a home sale contingency, may be important to potential buyers.
- Know the Market: Understanding the local real estate market can help determine your property’s fair market value. For example, the seller may have more negotiation power in a seller’s market, and conversely, the buyer may have more power in a buyer’s market. Consider consulting with a local agent before you make a real estate counter offer.
- Set an Expiration Date: You can know when to leave a deal by setting a contract expiration date.
- Be Realistic: Buyers should be realistic when they make an offer on a house and sellers when they make a counter-offer. Consider the list price compared to the local market conditions and how each influences the deal.
- Compromise: Secure the best deal by being willing to compromise. Maintain open communication with the potential buyer or seller, and be transparent with any specific concerns you may have.
Seeking Legal Advice
It may be worth having a real estate lawyer carefully review any offer you receive, whether an initial or counteroffer. A real estate lawyer can help each party with the legal implications of an updated contract.
Counter Offers and Cash Home Buyers
Counter-offers are an important part of the real estate transaction process. However, they can also slow down the sale. A cash buyer may be a better solution for some home sales.
Streamlined Negotiations
Cash buyers can offer sellers a more streamlined negotiation process with a faster closing date, helping speed up the selling timeline. Simplify the process by skipping home sale, appraisal, and inspection contingencies.
Faster Closing on a Real Estate Transaction
A cash buyer means faster closing and easier transactions. With a cash buyer, you control the contract terms plus the closing date. This means you can offload your home on your schedule.
Contact A-List Properties today at (972) 526-7042 to discuss your home sale, or use our online form to receive a fast cash offer.
Zach Shelley
Zach Shelley is a seasoned real estate investor with a diverse network spanning across the nation. As the founder of his own real estate venture, Zach is committed to offering innovative solutions to homeowners facing various real estate challenges.. Through his dedication and strategic approach, Zach continues to make a significant impact in the real estate industry, providing homeowners with alternative pathways to navigate their property transactions.
