Counter Offers in Real Estate

Learn more about what counter offers are, how they work, and our top tips for making one. 

By Emily Southey | 9 minute read

Counter offers might feel like a nuisance. From the outside looking in, you may see counter offers as a roadblock in the homebuying process. But the reality is that counter offers can have advantages for both the seller and the buyer, helping each party get the most out of the transaction.  

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What is a counter offer in real estate?

What is a counter offer in real estate? 

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Reasons a seller will counter offer

The main reason that a seller will present a counter offer is that they are dissatisfied with the initial offer and want to present another option that better meets their sales goals. 

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As mentioned, counter offers always include requested changes to the initial offer. Sometimes these changes are minor, such as modifying the closing or possession date, and sometimes they are major, such as changing the price the buyer must pay to purchase the property or increasing the amount of the earnest money deposit. Other examples of changes commonly requested in counter offers include modifying contingency time frames, adding amendments, stipulating that deposits must be released early, excluding or adding personal property to the purchase, or refusing to pay for certain closing fees.

How counter offers work in real estate

Now that you know what a counter offer is, you might be wondering about how they work in practice. Counter offers in real estate look a little different depending on whether you’re the seller or the buyer. Below is a breakdown of how they work from both perspectives. 

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Seller

When the seller receives an offer from a buyer and they decide to counter it, they must decide what to include in their counter offer. For example, if the asking price of your home is $540,000 and the buyer offers you $520,000 instead, you might submit a counter offer that increases the purchase price to an amount closer to the original listing price, such as $530,000. Once the counter offer has been submitted, the buyer may agree to that price or counter again. To give your counter offers the best odds of being accepted, your REALTOR® may advise you to provide comps to show how your newly-proposed price is on par with other properties in the area. Beyond increasing the asking price, a seller might counter with a different closing date or contingency period. No matter the terms of your counter offer, the offer will usually be communicated via your REALTOR®, and an expiration date will be put on the counter offer just as one was likely included with the original offer. 

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Buyer

If a seller makes a counter offer in response to a buyer’s original offer, the buyer now has the opportunity to counter the seller’s counter offer. There are no limits to the number of counter offers a buyer can submit. Sometimes, REALTORS® will advise buyers to make an initial offer below the asking price, in anticipation of a counter offer from the seller. The seller may counter with a higher price than the original offer, but one that is still lower than the original asking price. If the buyer thinks the price is too high, they could counter it. Using the above example, the buyer might counter with an offer of $525,000. When the buyer’s counter is ready, it will be sent to the seller’s agent via their own REALTOR®. 

Tips for making a real estate counter offer

If you are presented with a counter offer after making an initial offer and aren’t sure how to respond, follow the tips below.

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1. Negotiate according to the market

Let the state of the real estate market guide you when deciding whether to make a counter offer. Ultimately, the real estate market determines who has the upper hand during negotiations. In a hot market where demand outpaces supply and there are likely to be multiple bids on a home, the seller has the upper hand. As a buyer, you should be prepared to be a little lenient. The more times you counter and the more you demand, the less likely your offer is to be accepted. In contrast, if the market is cool then the buyer has the upper hand, and they might be able to get away with multiple counters until they are satisfied with the terms of the sale.

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2. Develop a negotiation strategy with your REALTOR®

Having a negotiation strategy, and sticking to it, is crucial when it comes to counter offers in real estate. Decide what you’re willing to compromise on to secure the home of your dreams and discuss this with your REALTOR®. Come up with set terms, such as the maximum asking price you’re willing to pay or which contingencies you’re not willing to budge on (e.g. a home inspection). Entering the negotiation phase with a clear game plan will also ensure you don’t react emotionally and accept an offer well above your budget.

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3. Counter respectfully

Whether buyers or sellers have the upper hand, respect is a vital part of any counter offer process. For example, if the market is cool, this doesn’t mean that sellers should go in with a low-ball offer. Low-ball offers are a surefire way to insult sellers, leading to instant rejections. Keep in mind that sellers have both a financial and emotional investment in their homes. While you should always stand your ground, you will also need to be respectful when drawing up your offer or rejecting their terms by submitting counters.