All About Real Estate Counteroffers
The Counteroffer Chess Match
Home sellers make counteroffers when they’re dissatisfied with a buyer’s initial bid. Typically, a counteroffer states that the seller has accepted the buyer's offer subject to one or more changes. These changes could include the sales price, the removal of certain contingencies, the earnest money deposit, or the closing date, among other options.
Counteroffers typically involve things like changing the price the buyer will pay for the property or increasing the size of the earnest money deposit. The seller might also refuse to pay for certain reports or fees in a counteroffer.
Changing the closing or possession date is another common reason for a counteroffer, as is excluding or adding personal property from the purchase. The seller might want to modify contingency time frames or have deposits released early. She might also want to add amendments.
It's also possible that the initial offer itself is basically fine, but the seller wants to fix a buyer's or agent's mistake.
How Many Counteroffers Are Normal?
Just as a seller can submit a counteroffer to a buyer, a buyer can counter the seller's counter, which then becomes a counter-counteroffer or Buyer Counteroffer No. 1. There is no limit to the number of counteroffers that can go back and forth.
Here's an example of five counters on a property that was listed at $415,000. The buyer had submitted a lowball offer of $400,000. This was the result:
- Counteroffer No. 1 (from the seller to buyer): Seller makes a counteroffer, asking bumping the sales price up to $412,000. They also agree to include the washer and dryer without warranty.
- Buyer Counteroffer No. 1 (to seller): Buyer counters sales price to $405,000. They agree to the inclusion of the washer and dryer without warranty.
- Seller Counteroffer No. 2 (to the buyer): Seller counters sales price to $409,900. They exclude the washer and dryer from the sale, to make up for the lower sales price.
- Buyer Counteroffer No. 2 (to seller): Buyer counters sales price to $407,500. They agree to the exclusion of the washer and dryer.
- Seller Counteroffer No. 3 (to the buyer): Seller agrees to the sales price of $407,500. Refrigerator, washer, and dryer are all excluded from sale.
The buyer finally accepts the fifth counter, all parties sign the contract, and the sale proceeds forwards.
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 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 verbally.
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.
How Is a Counteroffer Accepted?
The buyer can simply accept the counteroffer and deliver it back signed to the sellers and their agent. Time is of the essence, though, as all counteroffers include an expiration date. 3
It’s also important to note that the seller can accept another offer while the buyer is deciding whether to move forward—another reason to act quickly when a counteroffer is on the table.
If the seller does get a more favorable offer while the buyer is deciding, the seller will typically withdraw the counteroffer, effectively removing the first buyer from the situation.Can Sellers Make Multiple Counteroffers With Multiple Buyers?
Depending on your state's laws, a seller may or may not be able to issue multiple counteroffers to more than one buyer. In some areas, sellers can counter more than one offer simultaneously. More than this, each counter can be different in terms and price, too. Generally, most real estate agents do not recommend that sellers make multiple counteroffers at once, as it could lead to two, legally binding contracts simultaneously.
Article courtesy of thebalance.com