The Art of the Counteroffer

by Brian Bagnall

When you are presented with an offer, you have three alternatives:
Accept the offer as is
Reject the offer
Make a counteroffer

Just because an offer does not exactly match the price and terms you would like, it doesn’t mean the situation can’t be turned into a win-win for both the buyer and seller. A counteroffer is a common response to a buyer’s initial offer. It is simply a way for the seller to negotiate the price and terms with the buyer.

Here are some things to keep in mind when you are considering making a counteroffer:

1. Make the Counteroffer in Writing
Any negotiations of this stature should be made in writing to avoid any miscommunication. There is no need to draw up an entirely new contract; you run the risk of introducing errors or leaving something out. Simply add the details of your counteroffer directly onto the original contract form, initialing the changes you propose. Since the negotiations may continue for a few more rounds, having all the details in one place will minimize confusion.

2. Respond Promptly
When an offer is presented to you, you want to respond as promptly as possible. Remember that the buyer can withdraw the offer at any time before you formally accept it in writing. The longer you spend considering the offer, the more likely the buyer will withdraw his offer. Before you even put your home on the market, you should establish the bottom line price and terms you are willing to accept. Then, when presented with an offer, it will be much easier for you to determine the specifics of your counteroffer.

3. Use a Contingency Kick Out Clause
Buyers often include a contingency clause in their offer, making the offer dependent upon the successful completion of some event, usually obtaining financing or selling their house. You do not want to be trapped by a contingency with no definitive timeframe. You could end up waiting six months or longer for the buyer’s house to sell. A way to avoid this is to use a kick-out clause. It provides you protection by establishing a timeframe in which the contingency needs to be completed, such as 60 days. If this deadline is not met, you may begin accepting offers again.

4. Stay Focused on the Big Picture
When considering the terms of the buyer’s offer, don’t get wrapped up in the small stuff. If the buyer includes your refrigerator as part of the sale, but you had planned to take it to your new house, don’t respond hastily. It is much easier to buy a new refrigerator than to find a new buyer.

5. Work Closely with your Agent
Always remember that your real estate agent is your professional advisor. They have the knowledge and experience to guide you through the process of analyzing an offer and making a counteroffer. If you receive more than one offer, they can help you compare the offers and select the best one, including determining which buyers are the most creditworthy. Your real estate agent can also help you to stay focused on your goals without becoming sidetracked. If you need a referral for a great real estate agent, contact my office.