In an ideal world a seller will accept an offer without any negotiations…which may happen from time to time, however sellers are also known to reject offers for a variety of reasons. Or make counteroffers. This is especially likely if you bid low, or when you’re up against multiple competing offers.
If you do receive a counteroffer, it’s up to you to decide whether you want to accept the new contract, negotiate the terms, or walk away.
In cases such as these, it is important to work with an agent with strong negotiating skills to help guide you. This is what I do every day!
Here are 8 rules every buyer should know:
When you receive a counteroffer, you should respond quickly — ideally within 24 hours. The longer you wait, the more space you leave for another buyer to swoop in and get the property. If a seller senses hesitation, they may decide to withdraw their counteroffer before you even have a chance to respond.
While you obviously don’t want to overpay for a house, you may have to up the ante — especially if you initially made a lowball offer. With my expertise I’ll help you determine how much money you should add to the sales price to make it more enticing to the seller.
Then, through my powers of persuasion, I can make the counteroffer look even more attractive by pointing out similarly priced “comps” — recently sold homes in the area that are comparable in terms of square footage and features.
As we negotiate, it can feel like things are escalating quickly. It’s stressful. You may feel a sudden urge to do whatever it takes to win.
Before you go overboard, there are two things you must keep in mind:
Because your counteroffer has to be an amount you’re comfortable spending on a home. You want that new house and to keep living your life. Plus: You’re not out of options yet.
Increasing your earnest money deposit (EMD) — the sum of money you put down to prove to the seller you’re serious (i.e., “earnest”) about buying the house — is another way to show the seller you have more skin in the game. A standard EMD is typically 1% to 3% of the sales price of the home. Making a counteroffer with a 3% to 4% deposit could be what you need to persuade the seller to side with you.
Depending on the seller’s timetable, changing your proposed closing date could help with negotiating the sale. If the seller wants to stay in the home for a few days after closing, try offering a later closing date. As your agent I contact the seller’s agent to find out what’s important to the seller about a closing date.
Want to give your counteroffer an even bigger boost?
Reduce the number of contingencies you’re asking for. It’s your way of saying, “Hey, look, I have fewer ways to back out,” which gives the seller more reassurance that the deal will close.
But be selective: Some contingencies are too important to give up. A home-inspection contingency — the right to have a home inspection and request repairs — gives you an out if you spot major problems with the home (and protects you from buying a total money pit). Ultimately, waiving contingencies depends the market, your loan program requirements, your risk tolerance, and the circumstances of the house in question. And if you waive contingencies and then you find a problem, the seller isn’t responsible for fixing it.
At a mortgage settlement, home buyers have to pay closing costs for taxes, lender’s fees, and title company fees. Closing costs vary by location, but you can expect to shell out between 3% and 4% of the home’s sales price. The seller pays an additional 1% to 3%. (Smart Asset and Nerdwallet have simple calculators you can use to get a rough idea of what your closing costs might be.) As your agent I can give you an estimate of closing costs from the tile company & lender.
When making an initial offer, you have the option to ask the seller for concessions — a settlement paid in cash to help you offset your share of the closing costs. (This move is less feasible if you’re going up against multiple offers.)
Concessions effectively lower the seller’s net proceeds from the sale. Making a counteroffer that removes the concessions you would have otherwise received at settlement puts cash back in the seller’s pocket — and can improve your bid.
In this extremely low inventory market, many sellers are asking a buyer to agree to bring the difference to close if a property doesn’t appraise for the purchase price. If you are financing, an appraisal will be required, if the property doesn’t appraise you can still purchase it but would need to bring the cash difference to close if the seller won’t agree to reduce the price to the appraised value. As your agent I can suggest ways to handle this that would be in your best interest.
When negotiating with a seller, trust your gut — and take my advise as your agent!
And if you don’t want to make any more trade-offs — and the seller won’t budge — it’s smart to walk. That can be a tough decision to make, and rightfully so! Negotiating is tough. It can be draining. And losing something you really want can be hard & disappointing. Don’t worry, there’s a better deal for you out there! Every buyer I’ve worked with never wished for the house that got away! The one they eventually purchase it the one they are happiest with!
Excerpts of article in Houselogic, by Stacey Freed
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(727) 385-8869
karen@lucasgrouprealty.com
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