{"id":14072,"date":"2020-01-31T08:15:22","date_gmt":"2020-01-31T16:15:22","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=14072"},"modified":"2024-04-29T12:02:18","modified_gmt":"2024-04-29T19:02:18","slug":"buyer-counter-offer-etiquette","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/buyer-counter-offer-etiquette\/","title":{"rendered":"Real Estate Counter Offer Etiquette: When Heated Negotiations Are Business As Usual"},"content":{"rendered":"

First-time buyer expectation:<\/em> You submit a bid, the seller accepts with glee, and you\u2019re well on your merry way toward purchasing that dream home.<\/p>\n

First-time buyer reality: <\/em>You submit an offer<\/a>, and the seller says, \u201cClose…but no cigar,\u201d and then the counter offers begin like a game of ping-pong.<\/p>\n

Truth be told, counter offers are par for the course, but that doesn\u2019t make negotiating any less stressful. During any house negotiation<\/a>, you\u2019ve got hundreds of thousands of dollars on the line. Emotions can run hot on both sides. Price is often the biggest point of controversy, but as they say\u2026 everything in real estate is negotiable \u2014 repairs, closing costs<\/a>, who gets to keep the fridge, you name it. It\u2019s all up in the air.<\/p>\n\n\n\n\n\n

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Find a Buyer's Agent To Navigate the Homebuying Process<\/h3>\n

Working with a trusted real estate agent can help you ensure you are submitting your best offer. HomeLight can match you with a top-performing agent in your area in just under two minutes to get you on your way to homeownership.<\/p>\n \n

\n Find a Buyer's Agent<\/a>\n <\/div>\n <\/div>\n<\/div>\n\n\n

As a buyer who\u2019s never done this before, going up against an experienced seller in offer negotiations can feel a little like David against Goliath. Not to worry \u2014\u00a0we\u2019ve got the pro tips you need to follow perfect real estate counter offer etiquette, navigate the intense back-and-forth like a pro, and put your best foot forward without busting your budget.<\/p>\n

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Level up your negotiations by getting preapproved for a mortgage<\/h2>\n

Before you enter into any negotiations at all or put an offer on the table, speak with a lender<\/a> and get preapproved for a mortgage.<\/p>\n

\u201cI get all my clients preapproved upfront<\/a> because you’d be surprised by how many people declared bankruptcy or they’re looking at $300,000 but instead qualify for $200,000,\u201d says Heather Moorefield<\/a>, a top agent in Williamsburg, Virginia. \u201cAlso, if you’re in a multiple-offer situation, it does help if we’re preapproved so that we can get our offer in quick enough.\u201d<\/p>\n

If you make an offer for a loan amount that you technically won\u2019t qualify for, then you\u2019ve wasted your time along with the seller\u2019s \u2014\u00a0not exactly a polite thing to do.<\/p>\n

Go in strong, but not at 100%<\/h2>\n

If you want to get off on the right foot with the seller, lowballing them isn\u2019t the way to do it. An offer is typically considered a \u201clow ball\u201d if you\u2019re coming in at 15% or more below market value<\/a>.<\/p>\n

There is a time and a place for a low-ball offer<\/a> \u2014 such as if a house needs obvious repair work<\/a> or you\u2019re in a recession-like market<\/a> where home values are plummeting.<\/p>\n

Outside of those circumstances, keep in mind that the top priority of most sellers is to get the best possible price for their home, so offers that appear to be a joke could strike a nerve. In addition, sellers have no legal obligation<\/a> to respond to your offer at all so you need to at least get their attention.<\/p>\n

A \u201cstrong\u201d offer is one that\u2019s backed by what\u2019s happening in the market. With the help of your agent, do some research on how the seller\u2019s price compares to what you believe to be is fair-market value<\/a>. You can do this by checking out similar recently sold properties in the area (these are called \u201ccomps\u201d<\/a>) to gauge whether the seller is high, low, or hitting the sweet spot with their asking price<\/a>.<\/p>\n

\u201cWe usually negotiate less because we come in with a stronger offer, and it looks better to the seller,\u201d says Moorefield.<\/p>\n

However, that doesn\u2019t mean that you have to come at the seller with a full-price offer right out of the gate.<\/p>\n

\u201cOn average sellers probably counter twice in our area,\u201d Moorefield says, speaking to the norms of her market. \u201cSo I always have my buyers start off with some wiggle room. The offer that they submit at first is not the offer that\u2019s going to be accepted. We start lower to get to the point to where they\u2019re aiming at.\u201d<\/p>\n

Don\u2019t get tunnel vision on a baseline counter number<\/h2>\n

By the time you\u2019re in the heat of counter offer negotiations with the seller, you should know your budget inside and out. It\u2019s critical that you\u2019re already confident with what would be comfortable monthly housing payment<\/a> (including your mortgage principal and interest, taxes, insurance<\/a>, and maintenance) and how much you can afford to pay as a lump sum at closing. (HomeLight\u2019s Simple Home Affordability Calculator<\/a> is a great tool to help you kick off this process).<\/p>\n

On top of the down payment, buyers are on the hook to pay closing costs<\/a>, which can add up to as much as 5% of the total loan amount \u2014\u00a0and are an expense that takes more than half of homebuyers<\/a> by surprise, according to a report from ClosingCorp.<\/p>\n

You need this budgeting information, and to have a comprehensive picture of what it costs to buy a house in order to negotiate your counter offers wisely. In fact, second to the purchase price, closing costs are often the most negotiated line item between buyers and sellers.<\/p>\n

\u201cThe lenders that I work with will give my buyers worksheets upfront explaining what the closing costs will be,\u201d says Moorefield. \u201cThat tells me how much I need to ask the seller for in negotiations. We’re very tight on our numbers based on what the buyer is already approved for.\u201d<\/p>\n

Although clients tend to want to draw hard lines on price \u2014 like \u201cI\u2019ll only go up to $275,000\u201d \u2014 Moorefield says that\u2019s often the wrong approach to negotiations.<\/p>\n

\u201cI focus with buyers upfront: Don\u2019t get set on the bottom line counter number. Instead, I show them what the total cost would be upfront at the highest counter \u2014 at, for example, the list price. So then they know if we come down $5,000, that it may only change their monthly payment by $20 from the lender. And once they know that upfront, then the emotional standpoint of the countering goes away.\u201d<\/p>\n

But how you respond to a counter offer is highly personal. Moorefield once had a client who was a single mother and told her that the extra $20 a month was bread on the table. So Moorefield knew that if they moved forward in negotiations, she\u2019d need to work with the client to find cheaper homeowners insurance, or ask for a lender credit to reduce her closing costs, if the seller wouldn\u2019t budge on price. This is how having a top agent<\/a> on your side can be invaluable in negotiations and beyond.<\/p>\n

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Respond to counter offers in a timely manner, but know that sellers may try to rush you<\/h2>\n

Counter offers typically come with an expiration date<\/a>. In many markets, 48 hours is the customary acceptance window, but in a hot real estate market, an offer may only be on the table for 24 hours or less.<\/p>\n

Moorefield recalls a situation where the seller gave her buyers a very tight turnaround: “The agent sent the counter offer to me at 5 o’ clock and asked for a midnight decision. I said, \u2018Well, I’ll get to my phone right now,\u00a0 but I’m not sure if the buyers are going to respond before midnight\u2019.\u201d<\/p>\n

All is fair in love, war, and negotiations, so if you get this kind of demand from a seller, you\u2019ll have to decide whether you want the house enough to respond swiftly or risk losing out.<\/p>\n

Get creative in what you ask for \u2014 everything is negotiable<\/h2>\n

As a buyer you can negotiate on more than just the purchase price and closing costs, and doing so is well within the bounds of counter offer etiquette. If you can\u2019t get the seller to budge on the big-ticket items, you can also negotiate on the following:<\/p>\n