You’ve employed a Realtor®, established a listing price for your home and put your house on the market. Perhaps several buyers have completed showings, and one or two have perhaps even been highly complimentary about your home. Sooner or later, you’re going to find the buyer(s) that are interested enough that they will make an offer! Sometimes, the offer arrives to your agent, and frankly – it’s not what you were expecting. Perhaps the price is too low, or the offer is so full of contingencies that you fear that you may never reach closing. Is this where it all ends? In most cases, this is actually just the beginning of a successful transaction! Negotiations and counter-offers are a typical part of the home selling process. With guidance from your experienced Realtor, you can work to a deal that’s a ‘win-win!’
Receiving an offer (or offers!)
Before you can give a counter-offer, you first need to receive an offer. Many times, the first offer received may be the highest offer a seller will receive. Additionally, it’s important to note that most buyers will require a response within 24 hours. While this can be viewed as ‘pressure,’ it’s important to note that this is typical for our area/location. Buyers complete a standard Agreement of Sale to place their offer. The pre-printed “contract” is not legally binding until both parties agree to its terms. Until you sign, the document, it is simply an offer to purchase.
Using the standard document, the buyer inserts all the terms they would like to include in the offer terms – such as:
- down payment
- who pays closing costs
- any contingencies, such as a financing contingency if the buyer needs mortgage financing in order to proceed with the deal.
- Sometimes, there is a condition that stipulates that the buyer has to sell their current home &/or settle on their current home sale, before they can purchase your home.
If the offer is accepted, you will indicate this by signing the offer documents. At this point, the offer becomes a binding sale/purchase agreement/contract. Neither seller or buyer can ‘back out’ of the transaction unless a contingency (or contingencies) aren’t met.
The other options are to:
- reject the offer
- issue a counter-offer to the buyer(s) via your Realtor.
Making a counter-offer
Like an offer, the seller’s counter-offer is typically given in writing. (Verbal contracts aren’t binding). This is your opportunity to change any of the terms suggested by the buyer and to write some of your own terms. (ie – raise the offer price, request a higher earnest money deposit, delete some of the personal property the buyer is asking you to sell with the home, move the date by which the buyer has to satisfy acceptable contingencies.)
To be binding a binding contract, you must sign the counter-offer and deliver it to your Realtor – to relay to the buyer or to the buyer’s agent.
Negotiation / Counter-Offer Tips:
- Think carefully before issuing a counter-offer, as doing so cancels the buyer’s original offer. This means that you typically cannot go back to the buyer(s) later – and accept the original offer, as those terms have already been modified.
- Your counter-offer is considered a new offer. This puts the buyer(s) in charge of making a decision.
- Counter-offers typically always contain an expiration date. (ie – 5pm on Thursday)
If the buyer does not respond to the counter-offer by the expiration date, the counter-offer expires. These negotiations can only be reactivated by the buyer submitting a fresh offer.
What the buyer does next
When the buyer(s) receive a counter-offer, the buyer then has three choices:
- Accept the offer. The buyer does this by signing the counter-offer prior to the expiration date and delivering the signed offer to you or your real estate agent.
- Reject the offer. The buyer can discard your counter-offer and take no further action. At this point, the deal is “off the table” and can only be reactivated by the buyer making a fresh offer.
- Counter the counter-offer. The buyer can make a second counter-offer, or even a third or a fourth, until you reach agreeable terms. Thankfully, multiple counter offers are rare. Most well-advised buyers and sellers reach agreement after one or two rounds of negotiation.
When you should counter-offer – and when you should not!
Your Realtor’s expertise can be invaluable in handling negotiations! That’s why you should choose wisely! Your Realtor will handle offers and counter-offers all day every day, if they are a career Realtor. They will be assuring that the buyers who are submitting offers are indeed qualified to purchase your home prior to presenting offers to you, the seller(s). Naturally, sellers have a price expectation, and your Realtor will do their best to meet your expectations!
If the offer is not acceptable, your Realtor should give counsel to you and advise you on how best to negotiate the terms.
**TIP** Consider this:
- Making a counter-offer – even one that seems reasonable to sellers – could move the buyer towards the second or third choice home on their “list,” which could cost you the transaction.
- Another factor your Realtor will research is the buyer’s motivation, and ability to qualify for the mortgage. If the offer is unacceptable and you need to counter, what type of counter-offer will best hit the buyer’s most important terms?
The best advice is, listen to your Realtor®’s counsel and consider it seriously. If you can live with most of the items within the buyers’ offer, it’s probably better to accept the offer. Having a willing and able buyer under contract is worth far more than having a home sitting on the market waiting for the “perfect” offer to arrive. (which may never happen!)
Let’s start a conversation even if it’s early in the process for you as you consider selling your home. We have expert Realtors who are happy to discuss your plans.
Call The Jennifer King Team @ 717-723-9080!
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