The Ins and Outs of a Counteroffer
In many countries bartering over goods is a part of everyday life. However, the United States of America is not one of those countries. Americans are used to paying full price when buying and receiving full price when selling, not dealing with counteroffer after counteroffer.
That can make it seem even that much more overwhelming when it comes to the negotiations involved with buying or selling a house. Even though the real estate agents typically handle a counteroffer, to get the most out of your real estate transaction you need to understand the ins and outs of the counteroffer.
Reasons for a Counteroffer
If you have made an offer on a house that was below the asking price there is a good chance you will receive a counteroffer. The sellers wants to get the highest price possible when selling their house, so when a low offer comes in they are going to try to bring the offer up.
As the seller, if you counteroffer the original offer by the buyer there is a chance that they will give you a counteroffer. These offers can go back and forth many times before buyer and seller are able to settle on a price together.
Another reason for counteroffers is due to the closing date. If a seller is in a hurry to close on their house they might not want to accept an offer that has a contingency based on the buyer’s current house selling. The seller can present a counteroffer with different terms for closing.
Counteroffers can also come as a result of the findings from an appraisal or inspection. If an inspector finds potential problems in a house that will need costly repairs or an appraisal comes in below the original price on the offer the buyer will need to present a new counteroffer.
Working the Negotiations
It helps to know what the expectations and goals of the seller are. If you know they need to close quickly you can try to structure your counteroffer in a way to give them what is important to them, while still getting the price you want. Negotiations are not always related to the price of the house.
Many negotiations center on repairs that need to be completed in the house. As a seller it is usually to your advantage to pay to have an inspection done before listing your house for sale. You will then be able to take care of any repairs that an inspector will find during the selling process.
As soon as a buyer’s inspector finds an issue, as the seller you will either be dropping the price of the house or spending the money to complete the repair before closing anyway. Knowledge is power during negotiations for both the buyer and the seller.
How to Respond When You Receive a Counteroffer
When you receive a counteroffer as a buyer or a seller it is important that you carefully read over each detail that is included. The responsibility is on you to make sure that you understand what the counteroffer includes.
Whether you are the buyer or the seller it is important to know when it’s time to walk away from the deal. Sometimes even with multiple counteroffers a seller and buyer cannot agree on a price and terms. If you know what point this is for you, you will be able to make sure that you are not losing precious time when you could be finding the next house or the next buyer.