Real Estate Counter Offers
While everyone assumes it is just a part of the negotiation process when buying or selling a house, what often gets lost in the back and forth is that technically, a counter offer is a rejection.
Rejections have risks that buyers and sellers need to weigh against their goals.
For a seller, the goal is to get that house sold. At the highest price the market will support. In the shortest amount of time humanly possible.
For a buyer, the goal is to find a house that says home. With the right amount of space. And a few upgrades. And that is a bargain.
Since buyers and sellers have some conflicting goals, offers and counter offers can sometimes be taken personally.
What are the risks of real estate counter offers?
Counter offers always set up the risk of the other side just walking away from a possible sale.
Buyers may be fishing for a deeply discounted home and offend the owner with what they perceive as an insulting offer. Unless their agent is experienced in keeping the emotions out of a sale, this insulted feeling can cause the seller to make a counter offer that says “go away, I’ll never sell you my home” to the buyer, either by countering at full price or just a few dollars below. And that’s OK…as long as the seller is willing to take a feeling of satisfaction over the possibility of actually coming to terms and getting their house sold.
Sellers are, rightfully, proud of the home they have created and their pricing tends to have a lot of emotion built into it. It’s also possible that they bought when the market was higher and need a certain price to avoid it costing them money to sell their home. In either scenario, the home owner might be stuck on a price that a buyer just can’t justify based on what other homes are selling for. Again, an unrealistic counter could have them looking at the backs of the buyers as they walk away.
You’ll note I said unrealistic.
If an offer is low just because the buyer thinks that every home is selling for pennies on the dollar, then they will quickly find themselves on the side of a number of rejections by sellers.
Conversely, if a seller counters at a price that their agent is advising against based on the market, they will find themselves continuing to own a property that may not fit their needs any longer as the buyer moves on to one of the other properties available.
The bottom line is that sellers want to sell and buyers want to buy. Allowing a small amount of money to keep this from happening (on either side) is never a good strategy, but it happens all of the time. I’ve seen buyers and sellers dig in their heels when they are only $500 apart. As long as you are willing to risk losing a sale or the house that you want, go on with your bad self.
If you want to actually get to a closing, tamp down those emotions, listen to the advice of your real estate professional and find a happy medium, which is what a successful negotiation really accomplishes anyway.