The Art Of The Counteroffer
Unless you write a really killer offer, it’s pretty likely there will be a counteroffer or two in your real estate negotiation.
The counteroffer is where real estate deals are negotiated. In each counter, each party give a little and takes a little, to make the real estate transaction.
You may go through 2 counteroffers or you may go through 6, it just all depends on what each party is aiming for and willing to settle with.
In this post, we’ll cover the art of the counteroffer, how it works and why it matters in a real estate transaction.
Why Is A Counteroffer Happening?
It’s highly likely that a seller will counteroffer you, especially in a seller’s market. Sellers tend to have a bit more room for negotiation in a seller’s market, so they’re going to take advantage of it if they can.
A counteroffer doesn’t mean that a seller is unhappy with your original offer, it just means they may want to fine tune some of the terms of the contract. It could be as simple as upping the price, changing the close date, removing the home warranty, or a mixture of all of those items.
In the first counter back from the seller, you’ll finally see a bit of what they’re looking for. If you see them fine tuning price, you may find that that’s of big importance to them. Or, if they’re fine tuning the close date, you may find that they want to be done with the house as soon as possible or that they may need some time to find their own house.
So, What Happens Next?
You’ll always have an opportunity to respond to a seller’s counter offer. You can either accept it, reject it, or counteroffer back to the seller with your own terms. Just as your offer had an expiration date, the counteroffer will expire in a certain amount of time.
Generally, after seeing what the seller included in their counteroffer, you’ll include some of those terms that you can compromise on as a concession to the seller and to show that you’re willing to compromise a bit.
Here’s an example:
Counteroffer #1: Sales Price of $200,000, 60 Day Close Date, Use ABC Title Company
In your response, you may be fine with keeping a 60 day close and you may not have a strong opinion on the title company, so you’re willing to accept those terms and include them in your counteroffer back. But, you may not love the increase in sales price, so instead you’ll respond back with a sales price that you’re more comfortable with while still including those other items.
You’ll go back and forth like this until both the seller and buyer can come to some sort of agreement. Generally, if you’ve made it that far in negotiations, the buyer and seller will find some terms that they can both agree to. But, that doesn’t prevent from either one of them from walking away at some point if they can’t come to an agreement.
How Many Counteroffers Is Normal?
Some contracts take one counteroffer to come to agreement, others take six, some take more and some take less, there’s really know right number. As long as a buyer and seller can come to an agreement, it doesn’t matter the number of counteroffers.
The initial offer process can sometimes only be the beginning of the negotiation process in real estate. If a home inspection turns up a whole slew of issues or a home doesn’t appraise, buyers and seller may find themselves back at the negotiation table again. Once again, the buyers and sellers can either come to an agreement or walk away from the transaction at the point.
In any market, real estate is all about negotiation. From both parties, it’s a little give and a little take. If you approach negotiations thinking you’re going to get 100% of what you want, you may find that you struggle to come to an agreement.
Are you thinking about buying a Knoxville this year? Please let us know if there is any way that Knoxville Home Team can assist you. Rick can be reached at 865-696-9002 or via email at Rick@KnoxvilleHomeTeam.Com. Kati can be reached at Kati@KnoxvilleHomeTeam.Com or by phone at 865-696-1888.
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