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A buyer lobs an offer your way. You’re not quite happy with their price or their terms. So you knock it back, giving them a counter offer to consider. But if a buyer rejects your counter offer, then what?
Where you go from here depends on how long your home has been on the market, how quickly you need to sell, and how far apart you and the buyer are in terms of pricing, says Judith Topper, a top-selling real estate agent serving Longwood, Florida, and surrounding Seminole County.
Essentially, your options are to:
- Keep negotiations going to the point where you or the buyer counter again (valid only if the buyer is on board as well).
- Let the buyer walk away, and wait for another offer.
If you choose the first option, note that it’s a two-way street. Your counter offer effectively voided the buyer’s original offer. The buyer, who has been released from the original contract, has to agree to continue the conversation. They are legally free to make offers on other homes, and have no obligation to go through with this purchase.
But, depending on how much they want the home, they might still be willing to work with you. And then you have to decide if it’s worth playing ball.
With the help of your agent, here’s how to plot your next move.
Evaluate your negotiating position
“It’s one thing if the house just hit the market— we’re going to wait and see who’ll come in and pay the price,” Topper says.
But if your house has been on the market for 5 or 6 months and your agent is hearing that it’s overpriced — or if you need to unload it in a hurry because of a job change or other life event — prepare to give in a bit.
“It depends on how much the buyer wants that house, and how quickly that seller wants to sell the house. Every single situation is different, honestly,” she says. “If the seller has their eye on another property, [it may be wise to] bite the bullet on a few thousand dollars.”
Do a gut check on price
You can likely avoid a lot of back-and-forth with buyers, particularly when it comes to price, by valuing your home right from the start.
Topper, with an average of 52 days on market sells properties 37% faster than the average Longwood agent, says she’s keen to set a good listing price at the outset based on necessary repairs, such as replacing a roof or resurfacing a pool.
Sellers sometimes look at a well-loved home through rose-colored glasses and need a kind but honest assessment about its flaws.
“I’m very good at working with sellers to show them the light if I feel we really should come down because of things the buyer’s agent has pointed out,” either on a walk-through or because of the home inspection, she says.
That says, a buyer who submits a “ridiculous” bid, such as one that’s $100,000 less than what the house is worth, is bound to get a counter offer, if a seller considers the offer at all, Topper says.
An offer is considered a “low ball” if it comes in at 15% or more below market value. Such an offer can be appropriate if a house needs obvious repairs or you’re in a recession-like market where home values are dropping.
Unreasonable buyer? Let them walk
Negotiations, competing offers, and counter offers are a common dynamic in real estate. While buyers and sellers each want the most favorable terms for the property, sellers naturally want the highest price they can get while buyers typically want the lowest.
If your home is priced fairly for its condition and the state of the market, you shouldn’t expect a lot of haggling. In 2019 buyers typically purchased homes for 98% of the asking price, according to data from the National Association of Realtors. So, if your counter offer was reasonable, and the buyer doesn’t seem willing to budge, it may be best to let the buyer walk away.
Address any sticking points
Let’s say you’re not quite willing to give up on negotiations with this particular buyer yet. The best way to determine how much wiggle room you have is to ask why the buyer rejected your counter offer. What’s behind their initial bid?
Were the appliances old?
If buyers were concerned about your older refrigerator, HVAC, stove, washer/dryer, or other appliances, talk with your agent about offering a one-year home warranty, which averages about $350 to $600. This allows buyers to pay for any repairs or replacement at considerable savings.
Does your home need a major repair?
If the sticking point was another major repair, such as replacing worn carpeting or the roof, your agent may know a handyman service or any other professionals who can do the work before closing.
There may be ways to get creative. Topper says she’s handled transactions where the buyer comes in a little higher to cover the cost of replacing the roof, and a roofer she knows completes the job in time for the escrow company to pay them at the closing table.
What about closing costs?
Sometimes buyers ask sellers to pay closing costs. Sellers already pay about 6% – 10% of the sale price in closing costs, which include the real estate agent commission, taxes, and recording fees. Buyers typically pay about 2% – 5% of the sale price in assorted fees to settle up with the lender. One negotiating option would be to cover some of these costs, say, the cost of the title search.
But make sure your generosity is necessary — your negotiating power will largely depend on local market conditions. “When it’s a seller’s market, sellers never pay buyers’ closing costs. Ever,” she says. “When it’s a buyer’s market and the seller wants to sell, instead of coming down in price, they’ll just pay the closing costs.”
No luck on price? Negotiate for more favorable terms
If a buyer rejects your counter offer, it’s possible they’re close to what they can spend. While it’s easy to become frustrated, Freddie Mac suggests using the offer process to negotiate for what you want that isn’t money-related.
If the listing price isn’t flexible, maybe other parts of the offer are. For instance, you can present a counter offer that proposes a farther-out closing date, which would provide a longer escrow period and give you a more relaxed period of time to move out.
Where to go from here
Ultimately, it’s up to you and your agent to decide whether you see any potential common ground with a buyer who rejects your counter offer, or if you want to let this one go.
If you’re not ready to give up, official counter offers should be made in writing. However, seasoned agents will also communicate verbally while negotiating, so that whatever is in writing has already been hashed out a bit. “Usually, the agents talk it out so we’re not marking up contracts back and forth,” Topper says.
On the flip side, know when to draw the line.
“If I feel the buyer’s agent is correct, usually the sellers will go along with what I recommend,” Topper says. “But if I feel that it’s really not a fair offer, I just tell them, ‘I’m sorry; It’s not gonna work out. You need to go find something else.’ …It’s not the right buyer. Let’s wait for the right buyer to come along.”
Disclaimer: Information in this blog post is meant to be used as a helpful guide, not legal advice. If you need legal help with a real estate contract or counter offer situation, please consult a skilled lawyer.
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