A Complete Guide to Real Estate Counteroffers

By Emily Southey | 10 minute read

Counteroffers are a key part of the negotiating process in many home sales. So if you’re selling your home and aren’t sure what a counteroffer is or how to make one, you’ve come to the right place. This step-by-step guide will walk you through everything you need to know as a seller about counteroffers. 

–

What Is a Real Estate Counteroffer?

A counteroffer is an optional response to a prospective buyer’s offer on your home. After a buyer makes an offer on your home, you, as the seller, have the option of rejecting their offer, accepting it, or making a counteroffer. A counteroffer essentially functions as both a rejection of the original offer, in addition to a new offer that proposes changes to the original offer’s terms. 

 –

Sellers are not required to counter. Rather, they can simply reject or accept the buyer’s offer outright. However, they can be useful tools if you don’t want to lose the buyer but you want the offer to include more advantageous terms. Generally speaking, it’s common for sellers to submit counteroffers that stipulate changes relating to the purchase price, closing date, repairs, closing costs, marketing costs, and conditions (for example, home sale, financing, or home inspection contingencies).

 –

It’s important to note that if a seller chooses to make a counteroffer, the buyer is not required to accept it. Just as you had the option to reject, accept, or counter the buyer’s original offer, the buyer now has the option of rejecting, accepting, or countering your counteroffer. 

 –

If you work with a REALTOR®, they will likely negotiate with the buyer’s agent on your behalf and can also provide their professional opinion on how best to respond to both the original offer and subsequent counteroffers.

–

Why Sellers Make Counteroffers

Now that you know what a counteroffer is, let’s dive into some of the main reasons a seller might make one. Generally speaking, a seller will counter if they are not satisfied with the terms of the original offer and wish to amend it to better meet their goals. This is why counteroffers always contain proposed changes to the original offer. These proposed changes are typically more in line with what the seller hopes to gain from the transaction. 

– 

Amendments proposed through counteroffers vary significantly. They may include:

– 

• A different closing date
• A different date of possession
• A different purchase price 
• A different earnest money deposit 
• Removing a contingency or modifying the time frame of a contingency 
• Excluding or offering to add certain personal property (for example, kitchen appliances) 
• Refusing or offering to pay for certain closing fees 
• Stipulating that the deposit must be released early 

 –

Ultimately, the answer to the question “Why do sellers make counteroffers,” is that they want to negotiate the best possible price and terms for their home sale.

How to Write a Counteroffer in Real Estate

When writing a counteroffer in real estate, the first step is to carefully review the buyer’s original offer. Review it with your REALTOR® if possible and make a list of terms you are dissatisfied with. If there are many, your REALTOR® might recommend narrowing it down to a few.

 –

From there, start drafting a clear and respectful counteroffer letter that addresses your main concerns. As mentioned, some of the most common concerns for sellers include a purchase price that is too low, a closing date that doesn’t suit their schedule, or requests for repairs. For example, if you believe the buyer’s offer price is below market value, you can highlight this in the letter and indicate the market price. Alternatively, if you are not willing to conduct any repairs on the home, you can also state this clearly in the letter (and perhaps offer something else in lieu). Finally, if the proposed closing date doesn’t work for you, you can propose a new one or even a range of dates for the buyer to choose from. Ultimately, drafting a real estate counteroffer is about communicating your concerns to the buyer. Once the letter has been drafted, your REALTOR® will send it to the buyer’s agent, at which time the buyer will review it and either accept it, reject it, or counter it.

–

Real Estate Counteroffers Example

Here’s an example of a counteroffer on a home listed at $1,000,000, where the seller received an original offer of $920,000 from an interested buyer. 

 –

• Seller counteroffer #1: The seller does not want to accept or reject the buyer’s original offer, so they decide to make a counteroffer that increases the offer price to $940,000 and includes the kitchen appliances. 
• Buyer counteroffer #1: The buyer counters the offer price, decreasing it to $930,000, and agrees to the inclusion of the kitchen appliances. 
• Seller counteroffer #2: The seller counters the offer price again, raising it to $935,000. They exclude the kitchen appliances from the sale to make up for the higher offer price.
• Buyer counteroffer #2: The buyer counters the offer price to $932,000 and agrees to the exclusion of the kitchen appliances. 
• Seller counteroffer #3: The seller agrees to the offer price of $932,000 and excludes the washer and dryer, along with the kitchen appliances, from the sale.
• The buyer accepts the fifth counter (the third offer from the seller) and both parties sign the purchase agreement to proceed with the transaction.

–

Six Real Estate Counteroffer Strategies

Anytime you make a counteroffer, it’s important to have a strategy in place. We’ve put together a list of tips and strategies for making real estate counteroffers below. 

–

1. Counter according to the housing market

The state of the local housing market ultimately determines whether the seller or the buyer has the upper hand during negotiations. As the seller, it’s crucial that you understand the market, as this will inform the proposed changes in your counter, as well as whether you submit a counteroffer at all. In a buyer’s market, you may have to be willing to accept terms that you wouldn’t in a seller’s market. In a seller’s market, you shouldn’t settle for a buyer’s original offer unless it’s a particularly attractive one. 

2. Prepare for negotiations

The next tip for making a counteroffer in real estate is to prepare for negotiations in advance. Before you even receive an offer, we recommend thinking about what your ideal offer looks like (including the minimum purchase price you’d be willing to accept). You should also consider, perhaps alongside your REALTOR®, what terms of an offer you’re willing to compromise on and which are deal breakers. List your deal breakers according to importance. That way, when an offer is submitted, you can easily refer to and pull from this list when crafting a counteroffer. 

–

3. Be respectful and respond in a timely manner

Respect is vital to any real estate transaction. Although selling a home can be stressful, it’s important to always be polite and kind to prospective buyers. You can let the buyer know, in a respectful way, that you hear and understand their concerns but that you aren’t happy with the original offer. From there, communicate your preferred changes as clearly as possible. Further, in any real estate market, but especially a hot one, responding in a timely manner is crucial. Be sure to respect any deadlines and be upfront if you need more time to think about an offer or are unable to review the offer until a certain date (for example, because you are away on vacation or have a wedding to attend). 

–

4. Always include a counteroffer deadline

Speaking of responding to counteroffers in a timely manner, our next strategy for writing a counteroffer is to include a deadline. Most counteroffers will include expiration dates of 24, 48, or 72 hours. An expiration date means that the buyer has until the date to respond to the counteroffer. If they do not respond by the expiration date, the counteroffer is null and void, and a new offer would need to be sent if both parties still wished to proceed with the transaction. Including a deadline with your counteroffer is not only convenient but also creates a sense of urgency for buyers that might make them more likely to accept the offer. 

–

5. Know when to walk away

The next real estate counteroffer strategy is an important one: knowing when to walk away. There might come a point during the negotiation phase when both parties, after sending numerous counteroffers back and forth, simply can’t come to an agreement. This is where tip #2 (preparing for negotiations) might come in handy. For example, if the buyer is refusing to budge on some of your deal breakers, it’s likely a sign that the sale isn’t right. Ultimately, as the seller, you must remember your overarching home sale goals.

–

6. Work with a REALTOR® you can count on

One final strategy for making a real estate counteroffer is to work with a REALTOR® you can count on. Realtors are excellent resources when it comes to selling a home. Although you can choose to sell your home without a REALTOR®, doing so could leave you at a disadvantage, especially when it comes to the negotiating phase. Meanwhile, with an experienced REALTOR® by your side, they can advise you on which terms to counter and which to accept. They can also help you draft the counteroffer letter and submit it to the buyer’s REALTOR® on your behalf. To ensure you choose the right REALTOR®, research the top REALTORS® in your area and conduct interviews with prospective candidates, asking them important questions that will help you gauge if they’re a good fit.