Real Estate Term of the Day: Counteroffer
COUNTEROFFER – rejection of an offer to buy or sell, with a simultaneous substitute offer (Barron’s Dictionary of Real Estate Terms)
I’ve submitted my offer to the seller, now what?
- If the seller signs your initial offer before the Acceptance Deadline, the offer becomes a firm contract for purchase as soon as you are notified of acceptance
- If the seller does not sign your initial offer and does not respond by the Acceptance Deadline, the offer is considered expired
- The seller can respond to you with a counteroffer. A counteroffer will typically only change the items that the seller does not agree to or add in additional items that they are requesting that was not addressed in the initial offer
For example, you submit an offer for a home listed at $400,000 to the seller. In the offer you state you will pay $387,000 with $7,000 in seller concessions. You also write in the offer that the washer & dryer (listed on the exclusions list) are included with the sale. The close date is 30 days from the offer date.
After reviewing your initial offer, the sellers decide to give you a counteroffer. The counteroffer states that they will accept $397,000 for the purchase price (they did not counter the seller concession amount, which means if you accept their counteroffer you would still receive the $7,000 in seller concessions that you requested). They agree to give you the washer & dryer and also agree to close 30 days from the offer date. However, they decided to take the refrigerator that was initially on the inclusions list because their new home does not include a refrigerator.
As the buyer you can either accept their counteroffer or provide them with another counteroffer back.
Counteroffers reflect the back and forth activity of the marketplace. It’s a common, efficient and practical process. It is, however, very important the buyers remain in close contact with their agent during the negotiating process so that any proposed changes can be quickly reviewed. Just remember that negotiating is all about compromises. It’s not war or winner-take-all. It should be seen as a natural business process where both parties are treated with respect without losing sight of either their best interests or their basic transaction requirements.