Real estate counter offer etiquette
Is that a thing? I guess, it is a thing. I mean, I don’t want to say there is a right or wrong way to go about making a counter offer, but there are definitely better ways…
Whether you’re a buyer or a seller, let’s talk about best practices for putting together a counter offer that the other party is more likely to accept!
If this is your first time here, welcome! If you’ve been here before, thank you so much for coming back and spending your time with me. My name is Lindsay and I‘m proud to be your Anthem, Arizona REALTOR® with the Wise Move AZ Team at Realty ONE Group. On our blog and YouTube channel we have a lot of fun talking about all things Anthem and real estate every single Thursday, and we absolutely love having you along for the ride.
Counter offers are pretty common
If you’re a Seller, chances are you have received an offer from an interested buyer. The offer is intriguing enough that you want to respond, but there are a few terms you simply cannot live with. Since you don’t want to outright accept the offer, nor outright reject the offer, your best choice is to issue a counter offer.
On the flip side, if you’re a buyer, you likely made an offer, the Seller responded with a counter offer, and you aren’t willing to accept their counter. Rather than rejecting and walking away from the home, you have decided you want to respond with a counter offer of your own.
In Arizona, we have access to the awesome forms put together by the Arizona Association of REALTORS®. The counter offer form is pretty straight forward. Your REALTOR® will use this form to outline the terms you wish to change in the offer or subsequent counter offers. Using this form keeps everything on the up and up. While it is great if your agent can talk to the other agent and everyone can come to some sort of verbal agreement before putting pen to paper, it’s important to note that nothing will be enforceable unless it is in writing and accepted by both parties.
It’s that simple and that complicated, all at the same time! So, how do we put together a counter offer that won’t have the other party walking away?
Tip #1: Take a Step Back
If you’re in a spot where you are having to make a counter offer, you may be feeling a whole host of emotions. As a buyer, you might be fearful that you’ll lose the house. If you’re the seller, you might feel hurt that the buyer doesn’t seem to see the value of your home. Know that fear, hurt, anger, frustration, excitement, nervousness, and anything in between is totally normal. I definitely think it’s worth taking a step back, breathing, and acknowledging those feelings.
Now, toss them to the side!
That’s right, let the emotion go. I know, I know, it’s easier said than done, but bear with me. This is all about best practices and business etiquette. I want you treat this like a business decision, and that means not taking anything personally, and leaving emotion out of it.
Now that you’re in the right headspace, we can move forward.
Tip #2: Review the Facts
I want you to look at all of the offer and subsequent counter offer documents in detail.
This is totally a tangent, but I remember being in a meeting with our broker and she told me that she had seen an offer that wasn’t fully accepted until the 10th counter offer! Can you imagine?! I think the most I have ever personally experienced is three, and even that was exhausting for the buyer and seller.
Anyways, I want you to go through the purchase contract, any previous counter offers, and any other addenda or supporting documents. Which terms work for you, and which don’t? Be specific. For example, if the closing day won’t work for you, make note of it. I’m not saying you are going to get everything you want, but I want you to be thorough.
Also, if there are any inaccuracies, make note. For example, if your name is spelt wrong, a Counter Offer can be the perfect time to get this corrected without having to draw up a separate addendum to the contract after acceptance.
Once you’ve had a chance to review everything on your own, I want you to do the same with your agent. They will be able to answer any questions you may have.
Lastly, I want you to be cognizant of how long you have to respond to the other party. Part of having good etiquette is responding in a timely manner.
Tip #3: Do your Research
Learn about the Other Party
I want you to learn as much about the other party as you can. Your agent, whether that’s us or someone else, will be able to help with this. The more you know about the other party, the more you may be able to help sweeten the pot and find a middle ground in your counter offer that is agreeable to all parties. While money is a BIG factor in these negotiations, it isn’t everything. Oftentimes there are things you can do that make the counter offer more appealing without any major impact on your bottom line. For example, if you know that the Buyer loves your TV, you may be able to include it at a higher purchase price. If you’re buying, you may be able to accommodate the Seller’s preferred closing date for a break in the purchase price.
Know What’s Typical
Additionally, I want you to talk to your agent about what is typical. This can help you to understand if what you are asking for will be perceived as reasonable or unreasonable. For example, here in Anthem, it is typical to see the Buyer and Seller splitting the Capital Improvement Fee equally. If you’re the Seller and your proposing that the Buyer pay the full Capital Improvement Fee that may be perceived as unreasonable. Of course, it needs to be taken in context of the offer as a whole, but you get the point.
Tip #4: Get Creative
Alright, now that you’ve taken a breather, reviewed the facts, and done your research it is time to put pen to paper and get this Counter Offer written. The best counter offer is short, sweet, and to the point. Your agent should be succinct in their writing, including only the necessary details.
For example, if you want to change the closing date to January 15 because that’s the earliest the lender can accommodate, simply say, ‘Close of Escrow shall be January 15”. The counter offer is not the place to provide explanations. You agent can and should do that at the time they present the counter offer to the other agent.
Change only what you need and leave the rest. The fewer changes you propose in the counter offer, the cleaner it is, and the more appealing it may be to the other party. Nobody wants to feel like they are being “nickled and dimed”, so stick to only what is most important to you.
Take a moment to put yourself in the other parties’ shoes. How does your counter offer impact their bottom line? Does it feel reasonable?
Give and Take
Negotiations are a game of give and take. If you need to ask for more money, consider throwing in something that would make it more appealing to the other party. Like I mentioned earlier, if you’re the Seller and you’re countering with a higher purchase price, but you also know that you’ll be donating the outdoor furniture before moving, consider offering it to the buyer as a sign of good faith. I mean, if your outdoor furniture is really awful, that obviously won’t help because it will look like you’re just trying to pawn off your donations, but you get the point. Maybe a better example is, if you purchased bar stools that go perfectly with the kitchen and you know they won’t fit in your new home, consider making it a concession to the buyer in exchange for a higher purchase price.
Be thoughtful and creative in your response. If you’re thinking, mmm I’m not feeling all that thoughtful or creative, don’t worry. Your agent, can help to walk you through this. We navigate tricky negotiations all the time, and we can definitely make suggestions on how to formulate a strong counter specific to your circumstances.
Counter Offer Response Deadline
Lastly, be intentional with your response deadline. I am a fan of tightening up response deadlines, within reason. If all parties have been very responsive through the process so far, a couple of hours may be plenty for a simple counter. Alternatively, if the other party is travelling, you may need to give a bit longer. My goal is always to give just enough time to get everything buttoned up. You don’t want to give the other party so much time that they are able to shop your counter offer around for something better. Be aggressive, but reasonable.
Tip #5: Manage your Expectations
In my opinion, having good counter offer etiquette includes managing your expectations throughout the entire process.
You need to know that your counter offer could be:
If your counter offer is accepted, congratulations are in order. You are officially under contract. If your counter offer is rejected, you are back to the drawing board. As a buyer, this usually means you need to keep looking for a home. If you’re a Seller, this means you will likely be working with a different buyer.
It’s Not About Winning (or Losing)
You also need to know that the offer and counter offer process is not about winning or losing. It’s not a contest, the other side is not the enemy, and the goal is not to beat the other party. The goal is to find an agreement that all parties can live with. Usually this means that both parties had to give a little. Maybe you didn’t get the price you wanted, but the closing date is perfect. Know what you’re giving up, and what you’re asking the other party to give up. Being rational, thoughtful, and professional can go a long way.
So, there you have it! Are you ready to tackle your counter offer? I would love to hear your feedback or what points you’re planning to counter on in the comments box below.
Lastly, once you’re under contract the next big thing is working your way through the inspection period. If you want to learn more about reasonable requests after an inspection, click to watch this video. Alternatively, if you want to learn more about what all of the different MLS statuses mean, when buying and selling homes, click to watch this video.
Enjoy those and I’ll see YOU next Thursday!