With housing inventory still lagging, sellers continue to have the upper hand.
What is a counteroffer?
A counteroffer is an offer made in response to an initial offer with unfavorable terms. It’s part of the negotiating process and allows a buyer and seller to continue working with each other until they find a solution they’re both comfortable with.
Counteroffers are routinely used in real estate transactions, regardless of how good the original offer may be. It’s a way for both parties to get the most out of their money and create a transaction that’s ideal for everyone involved. More than the purchase price is involved when putting together a counteroffer; sometimes it’s not the price that must be negotiated. It may be other aspects of the transaction, such as the earnest money deposit required or the closing date. The buyer and seller may make multiple counteroffers, meaning the transaction can continue indefinitely until both parties are satisfied.
Every time a counteroffer is made, all previous offers are void. So, if a buyer makes a counteroffer and the seller refuses it, the buyer can’t take the initial offer. This works the same way for the seller, who may miss out on the opportunity to sell his property if he doesn’t accept the buyer’s counteroffer and the buyer doesn’t make another offer. Like any other agreement, a legally binding counteroffer must be in writing. If a buyer makes a counteroffer and the seller agrees verbally, the seller could still change his mind before a formal written contract is drawn up. Despite the verbal agreement, the deal would be off.
If someone is buying a home, she may notice that the seller has high-end kitchen appliances in like-new condition or other removable features like an above-ground pool. The buyer might make an offer on the property and request that the items stay. If the seller doesn’t want to leave an item but is interested in making a deal with the buyer, he might make a counteroffer without the item, perhaps by requiring less earnest money. Or, the buyer might make an offer less than what the seller wants, and the seller can make a counteroffer that raises the purchase price but includes bonuses such as appliances.
If you’re about to make an offer on a home for the first time, read these essential steps every new homebuyer should take.