What is the difference between an offer and a counteroffer?
Buying a home is rarely as simple as making an offer and paying that offer out. Negotiations can go back and forth for weeks before the seller and buyer are both satisfied. The vehicle for this negotiation is the counteroffer — a vital and complex rejection and counter to an offer made by either party. Counteroffers are typically handled between real estate agents and are time-sensitive. Selling or buying a home is more of a process than a transaction, so it’s important to understand counteroffers before you make your first offer.
The Initial Offer
As a home buyer, if you make an offer below the list price, the seller may choose to reject, accept or simply let the offer expire. If there are multiple offers, the listing agent will lay out the options for their client and then notify all buyers’ agents of the choices. Sellers may also counter your proposed closing date. If they need to move out quickly, they may want to push it earlier. They may also ask to rent the property for a time after the settlement. Price and closing date negotiations are common for both parties, but there are even more reasons sellers can potentially get countered.
The condition of the home is likely the biggest factor here. As home buyers conduct ongoing research into the home, any problems with the condition of the house can result in a counteroffer. If you’ve chosen to take appliances with you when you move, buyers may also look to negotiate for those. Appraisals are another reason for counteroffers. If an appraisal comes in below the agreed-upon sale price, it will affect the amount the mortgage company will lend to the buyer.
When reviewing a counteroffer, it’s important to have an experienced real estate agent who can capitalize on your advantages in a negotiation. Both sellers and buyers can take steps to put themselves in an advantageous position through planning and smart counteroffers. Knowledge is power in negotiations, so try to glean as much information about the seller or buyer as you can. Your agent will also seek information from the other agent on your behalf.
Sometimes sellers use the pending sale of their home to finance another, meaning they have a truncated timeline and could be more eager to make a deal. Similarly, buyers who have terminated a lease may be desperate for a place to live and more willing to negotiate. If you’re selling a home with known issues, anticipate how these problems may put you at a disadvantage during negotiations. A leaky roof may not be discovered until after buyers order a home inspection. Depending on the cost, they may ask the seller to either fix the roof or deduct the cost of a new roof from the sale price.
These types of issues put sellers at a distinct disadvantage because they have to either pay for repairs, lower the selling price, or reject the counteroffer and hope the next buyer doesn’t notice or care about repairs. This is why it’s worth the money to pay for an inspection before listing a house. Preparation can save you headaches and money down the road.
Shelhee and David are experts in Beverly Hills real estate including Bel Air, Hollywood and the entire Los Angeles Luxury Real Estate Market. For the most comprehensive real estate team in the LA metro area, contact David and Shelhee. For more information on buying or selling, contact us at any time.