Apr 1, 2020
A lot goes into putting your house up for sale, but one of the hardest steps will be deciding how much you should ask for it.
Even then, you may still receive an offer that comes in just below what you decided on.
While the right move is often to accept that offer and proceed with selling your house, you should know how to counter it just in case.
Understanding how to make a counteroffer in real estate could easily net you thousands of dollars in the end.
Wouldn’t it be great if you listed your house for the price you believed it was worth and someone immediately offered you that amount?
Unfortunately, more often than not, homeowners get offers that are less than the amount in their listing.
When this happens, you can accept it, reject it – which we’ll cover how to do in a moment – or make a counteroffer. This is when you counter their offer with another price or different terms.
Counteroffers are simple enough, but there are a couple of ways you can improve your approach.
First, consider reducing the window of time your buyer has to accept the offer. In most states, they have about three days. After that, you can move on and consider other offers or even raise your price.
So, your counteroffer could stipulate that the buyer only has two days to consider it before you can entertain others.
Another way to improve your chances of getting the buyer to accept your counteroffer is by volunteering to pay their closing costs.
This usually turns out to be about 2% of the home’s purchase price. Buyers are often low on cash by the time they reach the negotiation table, which is why it’s become fairly commonplace for them to ask the seller to help with the closing costs.
Before they do, you can include closing costs as part of your counteroffer. In fact, you could actually increase how much you were asking for your house. The buyer can cover that with their mortgage. It’s the closing costs that they’ll probably need more help with.
After receiving a counteroffer, most buyers should simply respond by countering with the list price. It’s always best to consult an experienced real estate agent in these matters, but again, this is usually the right move.
For one thing, many buyers simply assume that offering less than the list price is expected. Once they see you won’t budge, they’ll know you were serious about your price and offer it.
Secondly, some buyers are just looking for a good deal. They’ll make a number of low-ball offers across numerous listings just to see if anyone will bite. Counter with your list price and they’ll probably lose interest because they were never serious about paying anywhere near that much.
If you had a comparative market analysis done before listing your home, you know what your local market has to offer and should feel confident in what you’re asking. Don’t be afraid to counter with that original amount.
That said, your list price will always hold up best in a seller’s market. If the buyer has the upper hand and their offer isn’t obscenely low, it might make sense to take it.
This is also why it’s so important to invest in effectively marketing your house. No matter what kind of market you’re in, the more interest you attract, the more confidence you’ll have in your counteroffers.
As we just touched on, you’re under no obligation to accept whatever offer a seller makes.
Furthermore, many won’t be remotely surprised when they get word that their offer wasn’t accepted.
However, what they may not expect is an outright rejection of their offer. Instead of responding to it with what you feel is a fair compromise, you simply say, “no” and leave it at that.
In effect, it’s the same as countering with your list price, except that you’re not giving them a new amount that they could accept. It’s up to them to come up with a better offer.
The great thing about this strategy is that it leaves the buyer in the dark. You haven’t given them a counteroffer to accept or a frame-of-reference for how much they should offer the second time. This puts pressure on them because they know another buyer could offer the right amount at any moment.
Responding to a buyer’s offer with a flat-out rejection works best if they’re aware that you have showings coming up. They’ll know this means that a lot of offers are probably on the horizon, so they can’t risk making any more unreasonable ones.
This tactic is also stronger when your house is new on the market. Again, the buyer will know that competing offers are probably on the way.
The best-case scenario for a homeowner who’s selling is to see a bidding war break out as a result. This means that two or more buyers have actually increased their initial offer in an effort to win the house. It means you’re going to get more than you asked for no matter what. How much more depends on how long the auction-like bidding continues.
Needless to say, this should be your goal. This is also why it’s so important to know how to make a counteroffer in real estate. If you automatically accept the first offer you get or don’t know how to counter the right way, there will be no bidding war for your home.
The first step to making an effective counteroffer in real estate – the kind that will attract a bidding war – is to price your home correctly. We offer a free no-obligation home valuation report that can help with this.
After that, speak with an experienced real estate agent on our team who will refine that figure further and even prepare you for the possibility of a counteroffer.
Plus, when you list with SimpleShowing, you'll make even more by selling with our 1% listing fee.
Contact us today to find out more.