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How to Prepare for Counteroffers in Real Estate

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Counteroffers are widely popular in real estate. As a big part of the transaction process, counteroffers take a lot of time and diligence. Here are ways to prepare your clients during this undertaking.

What is a Counteroffer in Real Estate?

A counteroffer is a negotiation between a potential buyer and the seller during the real estate transaction process. The seller can agree to the buyer’s bid on a home or reject it, with a higher price and different terms. It is similar to bargaining, where a seller can timidly agree to sell to that potential buyer but under new terms. From there, the buyer can make another counteroffer that might align with their goals. 

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Real Estate Counteroffers Example

Let’s say a buyer makes a $575,000 offer on a new home below the listing price of $600,000. The seller can make a counteroffer of $595,000 where it’s a little less than the original price but still more than the original offer. After, the buyer can come back to the seller and say yes to the new price, or counteroffer with a new one at $580,000 which is right in the middle.

Tips When Working with the Buyer

Work with your client to draft the best counteroffer possible that benefits the buyer, but also helps them get closer to their goal of closing the deal. When dealing with your client, let them know before their initial offer that it is common for the seller to come back with a counteroffer. That doesn’t mean that the original offer was bad, it just means that the seller expects more from their home. 

Advise your client to stay calm and collected about the situation. It’s easy to get upset when their initial offer is rejected. However, that doesn’t mean the sale is over. It just means there needs to be more negotiation. 

There are ways you and your client can have negotiation leverage during this process. Some examples are having your client get preapproved for a loan, already coming with a backup offer to show you’re prepared, possibly waiving contingencies, and being prepared to have you and your client walk away from the deal. 

Tips When Working with the Seller

Agents can promote a balance between ensuring your client is getting the most money out of their home without turning potential great buyers away. Talk with your client about the minimum amount they are willing to sell their home for. Remind them that they shouldn’t stay fixated just on the price. There are other avenues of negotiation like seller concessions from property taxes, title insurance, home inspection, and more. You can also recommend to your client to add personal property as part of the transaction, which could be an incentive for the buyer client to meet your counteroffer.

Communicate with your client on different counteroffers that aren’t limited to price like changing the closing date. 

What Happens if a Counteroffer is Rejected?

If a counteroffer is rejected on either side, both parties can choose to walk away from the deal or create a new counteroffer. Second counteroffers need to be prepared within one to three days. Agents should make their seller clients aware that when another counteroffer is made, the original offer is no longer an option. 

Counteroffers in real estate can sometimes be a big headache for sellers and buyers. Yet, it’s a second chance for both parties to get what they want. To give clients the best chance at receiving the best offer, keep them updated on different trends within the industry. 

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