Real estate sales are unlike any other. They typically involve a significant amount of money, and will usually be the largest single purchase a person will make in their entire life. The decisions made are also the most consequential as they often involve the situation a family could be in for a significant chunk of their lives. For these reasons, it is rare for sales to be made in the same straightforward manner as store sales are made in which prices are fixed once you are ready to sell your home. Real estate transactions typically involve a bit of negotiation before both the buyer and the seller meet at an acceptable price.
Whether because the original offer is truly unacceptable, or used as a negotiating technique for a better deal, counteroffers are common practice in real estate sales, especially for sellers who are well aware of the prices that houses in California command.
The altered terms in counteroffers, however, are not limited to bargaining for a better price. They can also include better terms and deposit or earnest money amounts, waived fees, contingency time frames, or change of closing and possession date. Counteroffers can even include additional enticements like appliances and additional home features.
How is this done?
A counteroffer is an alternative sale contract proposal which can become the actual contract if an agreement is met. Presenting a counteroffer to supplant the original purchase offer is a legal way of not saying “yes” or “no” to such an offer. A counteroffer is like saying “yes” to a bid but not before stipulating conditions that are desired before making the actual deal.
When do sellers make counteroffers?
Sellers’ reasons for countering vary. Among the most common ones are:
- They want to make sure they’re getting the best offer. If a buyer makes an offer below the listing price and the seller counters with a full-price offer, it doesn’t always mean that they’re refusing to budge on the price. More often than not, they just want to make sure that that really is the best offer that the buyer can give. If you really like the property, you should always counter the seller’s counteroffer to see whether or not there’s room for negotiation.
- They want to change the terms. Sellers may want a buyer to increase the amount of the earnest money deposit, change the closing date, add/remove home features like appliances, and so on. They may also want to add, remove or modify contingencies, such as the amount of time for the completion of inspections or who gets to pay the closing fees.
- They changed their minds. Sometimes sellers aren’t as ready to move as they thought they were. If this is the case, they’re not likely to look favorably at any offer, no matter how attractive it may be. A good Realtor will be able to help you determine whether or not you’re dealing with this kind of situation.
How to accept or reject a counteroffer
Once both parties agree on the terms of the sale, signing on the dotted line is in order. This will effectively lock in the offer before it expires. In fact, it is highly recommended that after verbal acceptance, you have the buyer sign off on the agreement at once.
If you decide to decline a counteroffer, the best practice is to put it in writing and to state the reason for doing so.
The negotiation process can be rather tedious as there is really no limit to the number of counteroffers and “counter-counter offers” the buyer and seller can submit back and forth until acceptable terms are met. If and when a buyer and a seller come to an agreement and are ready to shake hands on the deal, their real estate agents need to act expeditiously. Like any offer, a duly submitted counteroffer has an expiration date.
Work with a professional
Any real estate transaction can get complex, fast. This is especially true when it comes to negotiating an alternative offer and preparing a counteroffer. The best real estate agents are adept in expediting the negotiation process and writing out the terms of a counteroffer that will work for both the buyer and the seller.
Your real estate agent is supposed to be on your side in all this so you can expect them to try to wrangle the best deal you can get.
The most effective negotiation techniques happen when guided by professionals who bring their knowledge of the property and the local real estate in general to the table. And if expertise is what you seek, come and have a talk with The Stephen Haw Group. Call Stephen Haw at 310.503.9886 or email skh8828(at)gmail(dotted)com today!