What is a counter offer?
It’s important that you know the difference between a counter offer and rejecting an offer. To counter means you are rejecting their offer, but proposing a new one in return. As to where a straight offer rejection tells the buyer, without any other input from you, to simply come back and try again. Why would you want to flat out reject an offer without a counter? It gives you the ability to accept another offer that may come in without having to rescind your counter to buyer #1.
Are we still following? Great. So now that we know what a counter off is, let’s talk counter offer strategy.
Why would a counter offer happen?
There are more reasons than just the list price that may get you an opportunity for counter offer strategy. Buyers may be in the market for more than just the bones of the home. The most common items that a buyer may try to bargain for are personal property items they saw during their showing (probably not your three stooges coffee mug collection) but more like appliances, the swing set in the backyard, or the pool table in the basement. Other common items in the negotiation are for the seller to cover closing costs, maybe the buyers want an earlier possession date, a longer inspection period, or a home warranty included. The buyer may ask for one of these things, all of them, or none of them. The point is, everything is up for wheeling and dealing so make sure you’re getting the most out of this sale, it is for most of us, the largest investment we’ll ever have.
Let’s Make A Deal
Now that you know what the barracudas are going to try to ask for, you can come up with a plan. The first step is to talk over your counter offer strategy with your listing agent. Let them know what you are willing to negotiate and what you are not. This way you don’t end up with seller’s remorse when you realize that mug collection would have looked great in your new man cave.
Using a combination of the bargaining chips mentioned above, you can create different counter offers that don’t lower your asking price. Here’s an example:
The buyer offers $220k towards your home that is listed for $235k. You counter to say full asking price and you’ll include the Stainless Steel wine fridge plus a home warranty for the first year. (Value added for the buyer= $1,000 added value to the seller $14,000)
Buyer is playing hardball and counters your offer at $225k with fridge and home warranty. Counter back with your original asking price, wine fridge, home warranty AND a sellers concession to cover 1% of the home price towards closing costs. (Total added value for the buyer=$3,300 added value to the seller= $11,700)
Those little extras add so much value for the buyer, especially if they are first timers and are coming up with closing costs out of pocket.
Generate multiple offers
The other instance when counter offers are so important is when you’re dealing with multiple offers. How do we get multiple offers? The number one factor is pricing it right, right from the start. You have to take your emotions out of the listing price. Prospective buyers aren’t interested in your sentimental value of the home, they want a home they can make their own memories in and for the right price.
Another way to maximize on multiple offers is to create a bidding war. Allow your listing agent to publish your listing and allow showings but make it known that you will not entertain any offers until after the open house on Sunday. This let’s the buyer pool know that they are in steep competition and their buyer agents will advise them to bring their highest and best offers to the table. No room for low balling when they don’t know how many other people they’re up against.
