Selling your house is not a transaction to be taken lightly. You want to learn about every step of the process. Real estate offers and counter offers are some of the fundamental elements of the selling and negotiation process. If you’re a real estate investor who buys and sells houses regularly, or if you’re just selling your own home, this is your guide to real estate counter offer etiquette. How does the process work, and what’s the etiquette for a real estate counter offer? Stick around to find out how to counter offer real estate.
What Is a Real Estate Counter Offer?
Both buyers and sellers deal with offers and counter offers. In this article, we’ll be focused on the seller’s end. When you first list your property on the market for a specific asking price, offers will (hopefully) begin to flow in. You’ll receive initial offers from buyers or real estate investors, oftentimes at lower than the asking price. This is because buyers either don’t have the money to pay for the asking price or are simply looking for a better deal.
Your options when responding to an offer from the buyer include:
- Accept the offer as is, resulting in accepting the contract to sell the property
- Reject the offer
- Respond with a counter offer
A real estate counter offer is an offer placed by a seller that is higher than a buyer’s offer, and lower than the original asking price. Say your asking price for a property was $250,000. The buyer could place an offer of $220,000, 12% less than the asking price. Your counter offer in this case could be anywhere between the buyer’s offer and your initial asking price. The goal of the counter offer is to have the buyer accept a price closer to the asking price. It’s also common for a potential buyer to counter your counter offer. In this case, you can either reject, accept, or move forward with the negotiation process.
Tips to Help You Follow Proper Real Estate Counter Offer Etiquette
First and foremost, be willing to negotiate
Before dropping any other tips, we have to stress the following: when selling a house, you should be willing to negotiate. Buyers rarely make their first offer close to the asking price. Know when to counter offer real estate, and how. Otherwise, buyers may get turned off and decide to look elsewhere.
Understand the buyer’s process
Understanding the buying process from a buyer’s perspective is essential to learning real estate counter offer etiquette. Just as we’re giving you some negotiation tips for sellers, there are some for buyers. So make sure to read an article or two about real estate negotiation tips for buyers to know what to expect, and how to respond.
Another thing you should consider is setting up some competition between potential buyers. You can do this by hosting an open house and only accepting offers after the event. When buyers sense competition, they tend to place higher offers. Even psychology comes into play when addressing counter offers in real estate!
Presentation and communication are key
There are multiple ways to deliver a counter offer. You can communicate it via text, verbally, or a properly written counter offer. We advise you to always write up your counter offer letter, and any further official communications with buyers. This will ensure the transparency of the process, in addition to abiding by legal procedures. Lastly, if you’re negotiating with multiple offers, make sure you keep all buyers updated on all the offers being made.
Real estate is not personal, it is a business. If a buyer counters your counter offer, it is not to personally swindle you – it’s to get a better real estate deal. Don’t get emotional. It can be easy to do so, especially if you’re selling your own home. But remember to keep your cool throughout this process. Finally, when developing a real estate counter offer strategy for sellers, look up different real estate counter offer examples for professional tips.
Don’t take too long to respond to an offer
Don’t take your time when responding to a buyer’s offer or counter offer, especially in the case of a buyer’s market. In this case, buyers will have the advantage of more real estate properties on the market. And if they don’t like your offer, or (lack) of etiquette, they may lose interest and move on to the next seller. So make sure you work and respond in a timely manner. In the case of a seller’s market, sellers may choose to take their time, or even not respond in some cases.
Speaking of timing…
Timing is really important when it comes to the real estate negotiation process. So when you make a counter offer, put an expiration date on it. This will push buyers to make faster decisions, especially if you want to close the deal quickly.
Dealing with buyers who use lowball offers
A lowball offer is a buyer offer that is usually 20% – 50% lower than a seller’s asking price. Should sellers accept these offers?
You may consider accepting a lowball offer if you’re desperate to sell your house. That is, when your property has been on the market for too long, you’re in a buyer’s market, or for any other reason. However, if you know your property is worth the asking price you’ve set, you have two ways to negotiate with lowball offers:
- Negotiate using a real estate counter offer and try to drive the selling price up.
- Kindly reject the offer. If the buyer is interested, they’ll come back with a higher offer – and you’ve succeeded to negotiate using a rather “extreme” strategy – rejection.
The Bottom Line
Real estate counter offers are not a complicated matter, but understanding them can make real estate negotiations go much smoother. Counter offer etiquette is meant to help both home buyers and sellers navigate the negotiation process. Remember that your end goal is to sell your home at a price that best suits you and the buyer, and to have everyone leave the deal satisfied. So whether or not you’re in a seller’s market and have the advantage, maintain good etiquette with buyers by following the above tips!
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