How Does A Real Estate Counter Offer Work? All You Need to Know (2023)

In a perfect world, closing on a home would be as simple as placing an excellent offer, signing the contract and being on your merry way. But this is no perfect world, and when you get a home buyer’s or seller’s offer, you typically have three options: accept, reject, or make a counter offer.

Since compromise is the heart of real estate, a counter offer is often the way to go. But a counter offer is easier said than done, and the counter offer may take months before the deal is done. Understanding the art of the real estate counter offer is the key to getting a favorable deal.

How Does A Real Estate Counter Offer Work? All You Need to Know (1)

What is a counter offer in real estate?

This is an offer given by a home seller in response to the buyer’s original offer. It implies the rejection of the buyer’s initial offer, but opens room for negotiations.

For instance, if the listed price for a three-bedroomed home is $250,000 and the buyer offers $230,000, the seller’s counter offer may be anywhere between the buyer’s offer, and/or the listed price.

It typically turns the tables around, since now the receiver can accept, reject, or issue a counterproposal. This can go on for months.

Agents Compete, You Win.

What can a counter offer counter?

Although a majority of counter offers focus on changing the listed price to a more favorable one for both parties, sometimes, they may also contest:

Earnest Money

Earnest money proves the buyer’s commitment and interest in a particular property. The larger the earnest deposit, the lower the chances of the sale falling through.

(Video) How to Handle a Real Estate Counter Offer

That said, the seller may accept the buyer’s counter offer, but counter it proposing a larger earnest money deposit. In our example above, the seller may accept the $230,000 offer, but counter it proposing a larger earnest money deposit.

This often happens when the house has been on the market for long, and the seller wants to eliminate the chances of another offer falling through.

The Closing Costs

A home buyer may accept a seller’s offer, but counter it by requesting the seller to cover part of the closing costs.

In the instance mentioned earlier, say the seller counter’s the buyer’s offer by changing the sale price to $240,000, the buyer may accept it, but counter it again by requesting the seller to cover origination and record filing fees. This strategy mostly works in a buyer’s market.

The Closing Date

Both parties may agree on the price, but the seller may need more time to exit the property. In such a scenario, they may counter the closing date by proposing a longer escrow period. It’s up to the buyer to accept or reject the offer.

How many counter offers can one make?

As mentioned earlier, a counter offer typically opens room for negotiations. In that light, there’s no limit to the counter offers the buyer or seller can make. They can go back and forth until both parties find common ground. Or, they could end with the first offer, if the buyer or the seller rejects the proposed terms.

Can a seller accept another offer during counter offer negotiations?

The world of real estate is guided by contracts. A Realtor can accept another offer while the buyer is thinking about the counter offer. However, it comes down to the nature of the counter offer contract.

For instance, if the seller had sent the buyer an irrevocable counter offer giving them three days to accept or reject it, then they cannot accept another offer until the stipulated three days are over.

If the buyer signs and accepts the offer before this period is over, the seller cannot back out because they run the risk of being under contract to sell the property to two different buyers. Also, if they accept another offer after the counter offer has been signed and accepted, the first buyer has the right to:

(Video) Real Estate Counter Offer Etiquette: Do THIS!

  • Put a lien on the home
  • Sue the seller
  • Coerce the seller into completing the sale

Note, the Realtor may even sue the seller if they try to back out from one offer to another since they will be missing out on potential commission from the sale.

However, there are several loopholes a seller may exploit to back out of a legally binding counter offer contract, so they can accept a better offer. These include:

  • Buyer requested contingencies: if the buyer plans on selling their home first before purchasing the new one, the seller may have the right to terminate the contract if they get a better offer
  • Missed deadlines: real estate home buying contracts feature a long string of deadlines for the buyer. If a buyer misses out on one of these deadlines, the seller can use this as a loophole to back out and accept a better deal from another buyer

What happens when a buyer rejects a counter offer?

A counter offer legally voids the buyer’s original offer. It typically releases them from any legal obligation they had towards the original contract, and there’s nothing you can do should they choose to reject your offer.

For instance, if the buyer in our earlier mentioned example — the buyer has no obligation to continue with the purchase despite the seller’s $240,000 counter offer.

However, depending on how much they want your home, the buyer might be willing to negotiate more even after they reject the offer. But, how you approach them determines whether they’ll be open to discussing other options.

So, if you plan on pursuing them, it pays to have a skilled Realtor by your side to help you navigate the situation professionally.

How to Negotiate and Arrive at Favorable Counter Offer Terms for Buyers and Sellers

Counter offers are meant to create a win-win situation for both buyer and seller. However one party may end up giving up too much. Here are tips to ensure you get favorable terms:

Work with a Realtor

Realtors are far more experienced in negotiations. They’ve handled similar situations before, and will know what loopholes to use to get you favorable terms from a proposed deal.

For instance, as a buyer, if you’re willing to offer the asking price, your Realtor will suggest tactics you can try to get a lower sale price such as asking the seller to cover closing costs.

(Video) Real Estate Counter Offer For Buyers!

If you’re the seller, the Realtor will suggest negotiation strategies you can use to motivate the buyer to pay out more, such as disclosing multiple offers.

Agents Compete, You Win.

Include Comparables

Commonly referred to as comps, comparables are often used to find the fair value of a property by comparing it to similar, recently sold properties within the same area.

Sellers can use comps to justify their asking price, while buyers can use the same to determine how much is too much in a counter offer.

Keep Emotions Out of the Deal

If you’re a seller, it’s easy to get caught up by the sentimental value you have towards your home, and end up overpricing it. That means it will end up staying in the market because it’s just not worth the price tag.

Similarly, if you find a home that fits your dream home expectations, you may be willing to pay whatever price is listed just to get it. To get the best value from a counter offer, you need to detach yourself emotionally from the home, and look at things from a business point of view.

Know Your Limits

Before you put your house in the market, figure out how much you want from its closing. If you’re a buyer, determine how much you’re willing to spend at maximum.

Get the Best Deals Today

Counter offers are an art of compromise. Both the seller and the buyer have to give something up so the outcome is favorable for both parties. However, this is only smooth-sailing in the presence of experienced Realtors. Choose your UpNest Realtor today to get the best deals.

(Video) What Is A Real Estate Counter Offer?

UpNest, which is owned by parent companyRealtor.com, is a no-cost service for home sellers and buyers to find the best real estate agents locally. The UpNest platform allows you to compare multiple agents in your area so you can compare reviews, commission rates, previous sales, and more.

Our agents have been carefully vetted and often offer competitive, lower than average commission rates to UpNest customers. There is no obligation to sign up with one of our Realtors, but when you can potentially save thousands on commission – why wouldn’t you? If you’re ready to get started, just enter your zipcode below!

Agents Compete, You Win.

Should I accept counter offer?

It all depends. In a work setting, a counteroffer may give hope of better working conditions and salary, but statistics show that this is often not the case. Around 50% of people who accept counteroffers leave for a new jobwithin 12 months. In real estate, the counter offer may be your best bet — or it could be a low quality buyer trying to lowball you.

What Does Counter Offer mean in real estate?

A counter offer is a new offer made in response to the initial offer in real estate. A counteroffer meansthe original offer was rejected and replaced with another one. The counteroffer gives the original offerer three options: accept the counteroffer, reject it, or make another offer.

(Video) Real Estate Counter Offer Etiquette | The Do's and Don't's

FAQs

How do counter offers work? ›

In the home buying process, a counter offer is an offer made in response to the original bid. When a seller gets an offer, they can choose to accept, reject or counter. In return, if the seller makes a counter, a buyer can also choose to accept, reject or counter it.

How do you make a counteroffer in real estate? ›

To foster a sense of competition, you should only accept offers after an open house. When making a counteroffer, put an expiration date on it to force a speedy response. If you agree to pay closing costs, then increase the purchase price.

Does a buyer have to respond to a counter offer? ›

As a buyer, you never have to respond to a seller's counter offer. Again, usually people do give responses, but you aren't required to do so, particularly if you lost interest in the home. If you let the expiration date and time pass, the counter offer is considered rejected.

What happens when you counter offer? ›

A counteroffer is a response given to an initial offer. A counteroffer means the original offer was rejected and replaced with another one. The counteroffer gives the original offeror three options: accept the counteroffer, reject it, or make another offer.

Can a seller back out of a counter offer? ›

Any change to an offer creates a new offer, called a "counteroffer." Like an offer, a counteroffer can be withdrawn by the seller at any time before it is signed by the buyer and the signed acceptance is delivered back to the seller or his agent.

How long does a seller have to respond to a counter offer? ›

How Long Do They Have To Respond? Legally speaking, there isn't a time frame sellers must respond to your offer. However, it's an unspoken rule in the industry that sellers and/or the listing agents should respond within a few days, with 48 hours the norm.

How do you politely ask for a lower price? ›

Initiate bargaining by asking something like, "Is that your best price?" Take a polite, positive approach. Body language and facial expressions play a big part. Look interested, but not so eager they'll feel confident you'll buy regardless. Smile and be friendly, but be prepared to walk away if necessary.

What is counter offer example? ›

A binding contract does not exist between the parties until a party involved accepts the other's offer. Such offers are typically seen in business negotiations, transactions, and private deals. Employment negotiations, real estate deals, and car sales are common examples of the counteroffer.

How do you negotiate a counter offer? ›

How to Negotiate a Counteroffer
  1. Know your value and the industry rate for your position. ...
  2. Don't rush it. ...
  3. Don't forget non-salary benefits. ...
  4. Don't push too hard. ...
  5. Don't say too much. ...
  6. Know what's really important to you. ...
  7. Use a template to frame your request.
22 Mar 2022

How long should a counter offer take? ›

A reasonable amount of time to respond to a counter offer is within 24-48 hours. This allows the employer to make a well-informed decision and also shows respect for the candidate's time. It might take a few days in certain situations, like when a budget needs to be approved.

Can buyer walk away from a counter offer? ›

Yes, you can walk away after making an offer on a house. Until both the seller and the buyer come to an agreement on the terms of the contract and officially sign the purchase agreement, you can back out of the offer.

How much should I ask for a counter offer? ›

Your first counteroffer:

Do your skills exceed what's required of you? Start with a figure that's no more than 10-20% above their initial offer. Remember, you're applying for entry level, and you shouldn't expect something on the higher range. Consider negotiating lower if 10-20% places you above the average.

Is accepting a counter offer a good idea? ›

Earning a higher salary

One of the most obvious benefits of accepting a counteroffer is that you can earn a higher salary. You don't have to go through the hiring process to earn more money. You may even be performing the same duties for more money, which makes your time more valuable.

What happens if a buyer reject a counter offer? ›

Your counter offer effectively voided the buyer's original offer. The buyer, who has been released from the original contract, has to agree to continue the conversation. They are legally free to make offers on other homes, and have no obligation to go through with this purchase.

What is always true about a counter offer? ›

What is always true about a counter offer? It terminates the previous offer.

What if appraisal is higher than offer? ›

What happens if the appraisal comes in above the purchase price of the home? You're in a good situation if this happens. It simply means that you've agreed to pay the seller less than the home's market value. Your mortgage amount does not change because the selling price will not increase to meet the appraisal value.

Can a seller counter offer higher than asking price? ›

Well, the short answer is yes. “Absolutely, the seller can counter your offer above the listing price,” says David Welch, a Realtor® in Winter Park, FL. “Whether or not the property will appraise is a different question.” That, of course, is one of the difficulties of finding the right price for a home.

Can the seller changed his mind after accepting the offer? ›

Yes. A seller can back out of an accepted offer or before closing, as long as there are no specific clauses that state otherwise. That being said, whether or not a seller can back out of a contingent offer depends on the contract that was written and what is mentioned in it.

How do I convince a seller to accept my offer? ›

To have the best chance at getting your offer accepted, check out these 5 must-do tips.
  1. Get pre-approved & provide proof with your offer. ...
  2. Offer more earnest money. ...
  3. Discover seller's motivation to help structure your offer. ...
  4. Shorten the due diligence period. ...
  5. Make the offer as clean as possible.
7 Aug 2019

Which offer would be the most appealing to a seller? ›

“A cash offer is usually more appealing than a finance offer as the seller doesn't need to worry about whether the bank will approve your loan,” says Sam Heskel, president of Nadlan Valuation, an appraisal management company in Brooklyn, New York.

Why do realtors wait to present offers? ›

As a reminder, some agents mistakenly believe that sellers must consider offers in the order they are received. In fact, even though listing agents are expected to present offers immediately, their seller-clients are certainly permitted to wait on other offers before considering and responding to any offers.

How do you negotiate without offending? ›

How to Negotiate Nicely Without Being a Pushover
  1. What the Experts Say. ...
  2. Make small talk. ...
  3. Don't try to buy love. ...
  4. Be creative. ...
  5. Stress “we” over “I” ...
  6. Ask questions… ...
  7. Walk in the other person's shoes. ...
  8. Principles to Remember.
9 Apr 2015

What are some examples of negotiation? ›

Negotiating a job offer, asking for a raise, making the case for a budget increase, buying and selling property or equipment, and closing a sale with a customer are just a few examples of the many deals you might be involved in.

What do you say to negotiate price? ›

Top eight phrases to use when negotiating a lower price
  • All I have in my budget is X.
  • What would your cash price be?
  • How far can you come down in price to meet me?
  • What? or Wow.
  • Is that the best you can do?
  • Ill give you X if we can close the deal now.
  • Ill agree to this price if you.
  • Your competitor offers.
15 Jun 2020

Does a counter offer need to be in writing? ›

Basically, this means that you can withdraw a counter offer. But, the counter should be verbal and not written and you should make sure that your agent is doing everything right to allow you that option.

What are the two types of offer? ›

Express and Implied Offers

When an offer is expressly communicated by the offeror, it is regarded as an express offer. The communication of an express offer can be written or verbal. An offer that can be understood by circumstances of case or the conduct of parties is known as an implied offer.

What is the mirror image rule in contract law? ›

The mirror image rule is a concept in contract law. It means that when you say “yes” to an offer, that becomes the basis for a contract, so you're accepting that offer exactly as it is – with no changes or modifications. Therefore, the acceptance must be a mirror image of the offer.

How long does it take to hear back after a counter offer? ›

One to three days is the customary time limit for a buyer's counteroffer. Home sellers and buyers, though, are free to ask their opposites for additional time to consider any counteroffers.

How do you respond to a counter offer? ›

Common responses to a candidate's counter offer letter.
...
What to include in your response to candidates
  1. A professional greeting.
  2. A message stating whether you accept the candidate's offer.
  3. Your enthusiasm for them to join the team.
  4. A summary of the new terms you're offering.
  5. Reasons they should work for your company.

What is cross offer? ›

When two parties make an identical offer to each other, in ignorance to each other's offer, they are said to make cross offers.

How many people leave after accepting a counter offer? ›

Statistics show that 90% of employees who accept a counter-offer have left their positions within 12 months.

Why would a seller not counter offer? ›

A seller will probably write a counter offer at list price or higher when it's a seller's market. These sellers won't budge on price because they know that there are probably a dozen other buyers out there who will agree to pay full price or even more.

What is a lowball offer? ›

A lowball offer refers to an offer that is far less than the seller's asking price or is deliberately too low, as a means of starting negotiations. To lowball also means to throw out a purposely lower than reasonable number to see how the seller will react.

When should you walk away from property? ›

Sellers should consider walking away from a deal if 1) a buyer's requested concessions get out of hand; 2) if the countering offers are lowballing the property; 3) if a buyer doesn't put forward the necessary funds; 4) if a buyer threatens to walk away multiple times; 5) if the property's appraisal comes back too low ...

When should you walk away from a house sale? ›

Buyers should consider walking away from a deal if document preparation for closing highlights potential problems. Some deal breakers include title issues that put into question the true owner of the property. Or outstanding liens, or money the seller still owes on the property.

Should you always counter a house offer? ›

In a buyer's market, a seller may not want to counteroffer an initial offer too aggressively, or the buyer can easily move on to the next property. On the flip side, if it's a seller's market, the buyer should be very cautious with making counteroffers.

Should you negotiate if you're happy with the offer? ›

It really depends. Some people feel you should take the first offer if you're happy with it. Never negotiate just for the sake of negotiating. Other people disagree with that position and believe anytime you're given the chance to negotiate, you should.

How do you negotiate? ›

5 Tips for Negotiating Better
  1. Make the first offer. ...
  2. When discussing money, use concrete numbers instead of a range. ...
  3. Only talk as much as you need to. ...
  4. Ask open-ended questions and listen carefully. ...
  5. Remember, the best-negotiated agreement lets both sides win.
7 Jun 2021

How do you decline a counter offer example? ›

I appreciate your time in considering my counteroffer with respect to the compensation package. I understand that you must work within your budgets, but unfortunately I must decline the position at the current offer. Again, I am grateful for your time and consideration during the negotiation process.

How do I decline a counter offer on a house? ›

All you have to do is politely decline the counter offer (in other words, don't sign it, and confirm with your agent that you don't want to negotiate further). As a courtesy, your agent will communicate with the listing agent about your position and decision.

Should you ask for a counter offer? ›

Accepting a counteroffer is likely to damage your relationship with your current employer. After all, you've just told them you were leaving and are now only staying because they offered you more money. This might cause them to question your loyalty and whether you'll resign the second you receive a better offer.

Can you negotiate after accepting an offer? ›

So, can you negotiate salary after accepting a job offer? The answer is yes, you certainly can.

How many times can you counter offer? ›

Just as a seller can submit a counteroffer to a buyer, a buyer can counter the seller's counter, which then becomes a counter-counteroffer or Buyer Counteroffer No. 1. There is no limit to the number of counteroffers that can go back and forth.

How do you respond to a seller's counter offer? ›

If you're fine with the sellers' conditions in their counteroffer, you can simply accept the offer by signing it. If you don't like the counteroffer, you and your real estate agent should discuss the specifics of the offer and see if there are parts of it that you can accept.

Can you make two offers on the same house? ›

You can put multiple offers on houses – and it's a common practice amongst buyers. There is no law against making offers on more multiple houses.

What happens to an initial offer from the buyer after a seller counters? ›

What happens to an initial offer from the buyer after a seller counters? It's no longer in play. Which offer would be the most appealing to a seller? It depends on the seller's needs and motivations.

What percentage of people leave after accepting a counter offer? ›

A counteroffer may give hope of better working conditions and salary, but statistics show that this is often not the case. Around 50% of people who accept counteroffers leave for a new job within 12 months. Just because the offer may seem like a good option, it won't guarantee job satisfaction down the line.

Do buyers expect a counter offer? ›

Unless you're being offered an amount equal to or above the full listing price, many buyers expect you to make a counteroffer — which is why a lot of people make an initial offer that's lower than the asking price. And why a lot of buyers make an initial offer that's lower than what they're ultimately willing to pay.

How much should a counter offer be? ›

A good range for a counter is between 10% and 20% above their initial offer. On the low end, 10% is enough to make a counter worthwhile, but not enough to cause anyone any heartburn.

Can you negotiate a counter offer? ›

When negotiating your counteroffer, you'll need to make a case for why you should receive a better offer. This case will be built on your value: You'll want to remind the employer of why you're a particularly good match, offering experience and know-how that other candidates do not.

What do you say when you accept a counter offer? ›

Accepting the counter offer

Thank you for your interest in joining our company. We appreciate the time and effort you have put into the application process. After careful consideration, we have decided to accept your counter offer. We are happy to match your salary request of $ [X] per year.

How do you turn down a counter offer? ›

Here's how to decline a counteroffer successfully:
  1. Select the medium that makes you most comfortable. ...
  2. Express your gratitude. ...
  3. State your rejection clearly. ...
  4. Give a short, yet honest reason for declining the job. ...
  5. Provide a referral. ...
  6. Express your willingness to keep in touch.

How do you say no to a counter offer? ›

“I do not believe accepting a counteroffer is in the job seeker's best interest, so I would suggest responding to that inquiry with something along the lines of, 'I've agreed not to share the salary offer,' followed quickly by a conversation about how you are willing to help your current company transition someone new ...

How do you politely ask for a lower price? ›

Initiate bargaining by asking something like, "Is that your best price?" Take a polite, positive approach. Body language and facial expressions play a big part. Look interested, but not so eager they'll feel confident you'll buy regardless. Smile and be friendly, but be prepared to walk away if necessary.

What is counter offer example? ›

A binding contract does not exist between the parties until a party involved accepts the other's offer. Such offers are typically seen in business negotiations, transactions, and private deals. Employment negotiations, real estate deals, and car sales are common examples of the counteroffer.

How do you respond to a home counter offer? ›

A counteroffer changes one or more aspects of your original offer, and you have three options for responding: Accept the sellers' counteroffer. Reject the sellers' counteroffer. Present a counteroffer of your own.

Should you negotiate if you're happy with the offer? ›

It really depends. Some people feel you should take the first offer if you're happy with it. Never negotiate just for the sake of negotiating. Other people disagree with that position and believe anytime you're given the chance to negotiate, you should.

What do you say in a counter offer email? ›

Thank you very much for your offer of the position [Position Name]. I'm impressed by [something about the company or team], and I'm excited about the opportunity. I am confident my experience will be a great fit for the position because [explain]. I'm hoping we can further discuss the base salary.

How do you gracefully leverage an outside job offer? ›

6 do's and don'ts for how to leverage a job offer
  1. Do have well-defined goals. ...
  2. Don't get stuck on salary. ...
  3. Do your research. ...
  4. Don't make threats, veiled or otherwise. ...
  5. Do confirm your commitment to the company. ...
  6. Don't lie about an offer.

When should I follow up after counter offer? ›

Once you send your counter offer email, there may be a short delay—typically less than 24 hours—and the recruiter or hiring manager will respond with something like, “Thanks for considering our offer.

What is cross offer? ›

When two parties make an identical offer to each other, in ignorance to each other's offer, they are said to make cross offers.

How do you negotiate? ›

5 Tips for Negotiating Better
  1. Make the first offer. ...
  2. When discussing money, use concrete numbers instead of a range. ...
  3. Only talk as much as you need to. ...
  4. Ask open-ended questions and listen carefully. ...
  5. Remember, the best-negotiated agreement lets both sides win.
7 Jun 2021

Videos

1. Contract Tip - Counter Offers: How They Work & What to Sign
(Real Estate Made Crystal Clear)
2. The Many Ways to Make a Counter Offer
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3. The Do's and Don'ts for Real Estate Counter Offer Etiquette
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4. How To Negotiate Real Estate Price
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5. How Do Sellers Review Multiple Offers?
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6. Counter Offers
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