Real estate negotiations can be simple and straightforward – or they can be complex and time-consuming. Because each home sale is different and because each set of buyers and sellers have their own specific needs, it’s impossible to say for sure whether or not your offer to a home seller will be accepted. In many cases, when a buyer makes an offer, the seller will respond with a counteroffer. At this point, the buyer can either accept the terms of the counteroffer, reject it, or create their own counteroffer with modified terms.
How likely is it that I will receive a counteroffer?
Whether or not you will receive a counteroffer is dependent on several factors. The state of the local real estate market may have a lot to do with it. For instance, if you’re living in a place that is experiencing a lot of buyer demand and homes in the area are selling fast, you may not receive a counteroffer because the sellers are likely to get several offers – some of which may be more appealing than the one you submitted. However, if your local market is slow and there is more inventory than there are interested buyers, you’ll likely have the upper hand and the seller may accept your offer or submit a modest counteroffer. There are no guarantees though. So expect the unexpected and be prepared for just about anything.
What exactly is a counteroffer?
A counteroffer will usually include a higher price and/or a larger earnest money deposit. It may also include a different closing date, changes in contingencies, or other negotiable items like closing costs or personal property that will or will not sell with the home (washers and dryers, pool tables, hot tubs, etc.). After a potential buyer receives a counteroffer from the seller, they can either accept it, reject it, or make another counteroffer.
Counteroffers expire after a certain amount of time has passed. If the buyer does not respond by the expiration date, the counteroffer becomes void and the seller is able to accept an offer from another buyer.
How you should handle a seller’s counteroffer will depend on several key factors. Some of which will include…
- How badly you want the home
- Your home buying budget
- The limits of your mortgage pre-approval
- Your timeline (if the sellers won’t be able to move out before you need to move in, it could complicate things).
If the seller’s counteroffer looks good to you and fits in with your financial needs, you can simply sign the offer and accept it. If the terms of the counteroffer are undesirable or do not fit in with your budget and/or timeline, you and your real estate agent can talk about submitting a counteroffer with specific changes to make the terms work for you.
Keep in mind that once you make a counteroffer to the seller’s counteroffer, you may be obligated to go through with it if they accept. Consult your real estate agent for more information on the process. Just make sure you are comfortable with the terms laid out in your counteroffer before officially submitting it.
Also keep in mind that the home must appraise so the value is equal to or higher than the sale price. If the appraised value come in below the contract price, this generally gives the buyer more power to renegotiate the price. This is why it is important to have an appraisal contingency in your home purchase contract. An appraisal contingency protects the buyer by ensuring that if the property value is not appraised at a minimum, specified amount, the buyer can terminate the contract and will receive their earnest money deposit back.
For more information on appraisals, contingencies and making counteroffers in real estate, talk with an experienced real estate professional. He or she can help educate you on the specifics and help you devise a home buying strategy that makes sense for your budget and needs.
Other topics you might like…
- More Options for Buyers as Inventory Grows
- How to Avoid Being Outbid When Buying a Home
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