Counteroffer Mistakes In Real Estate
Many home buyers, especially first time buyers make counteroffer mistakes. Some believe a seller will always counter and others sit on a counter offer from the seller putting themselves in jeopardy of losing the house.
A counteroffer from a seller isn’t guaranteed. Depending on how long the home has been on the market, how many showings there have been, and the seller’s motivation to move they may or may not counter the offer a buyer submits.
Counteroffer Mistakes On New Listings
Homes that are new listings will rarely sell at less than list price. A home that sells within the first week of being on the market was priced at or below fair market value. The market speaks when homes are priced correctly! It’s a risky plan to try to negotiate thinking the seller is going to counter when the home is newly listed.
Counter offers are not guaranteed and even if the seller counters there’s another mistake buyers frequently overlook.
The Time It Takes To Process A Counter Offer
Time opens the opportunity for another buyer to tour the home and write an offer. It could very likely be a full price offer and even stronger financing or better terms.
→The listing agent and seller connect to talk about and analyze the offer
→Seller agrees to counter – the counter can be on price and terms
→The listing agent makes the changes and sends to the seller to sign, the seller may not check email until the next morning to sign
→The listing agent receives the signed counter, sends it to the buyer’s agent
→Buyer’s agent contacts the buyer to share the counter and discuss the changes. Buyer has to decide whether or not to accept the counter or counter back
→Buyer decides to accept
→Buyer’s agent sends the contract to the buyer to sign
But, wait – there’s a counteroffer mistake about to happen.
Before the buyer signs to accept the sellers counter the listing agent calls the buyer’s agent to share another offer has been received, it’s stronger, and the seller is withdrawing the counter.
Poof! There goes the house because too much time passed.
Every item above can take hours. The listing agent, seller, buyer agent, and buyer all have work and life happening while handling a counter. They don’t get finalized in the blink of an eye! Because of that emails may sit for an hour or two, phone tag can be played, and then there’s time to consider the counter terms. A day can easily pass before acceptance or counter are delivered back to the seller.
Why Is This A Counteroffer Mistake?
Because the odds of you being the only buyer in the marketplace or even the only buyer interested in the home are low. Non-existent in some markets. What you find appealing in a home probably isn’t drastically different for any other home buyer.
So, it’s another counter offer mistake to open the opportunity for the seller to have another buyer submit their offer.
Just because the seller countered doesn’t mean you’ve secured the house.
24 hours or more is very common when it comes to counter offers. That’s more than enough time for another buyer to write an offer. A strategy the first buyer overlooked because they were hoping to negotiate.
Buyers who are looking to save by offering less on a home don’t see that it’s a counteroffer mistake. There was never any savings to be gained if the seller had no intention of accepting a lower offer.
Even if the seller countered and was willing to accept a few thousand less it still opens the opportunity for another buyer to come in and secure the home.
Don’t be the buyer that makes a counteroffer mistake. Sellers don’t always counter the offer and even if the seller does you can still lose the house if it’s still being shown.
**These scenarios don’t apply to every market – market conditions matter. They do however apply directly to my market at the time this post was written
Additional Resources:
Mortgage Pre-Approval vs. Mortgage Pre-Qualification
How To Buy A Home With No Money Down via Luke Skar of Madison Mortgage
C 703.431.3755 | O 866.825.7169 ext: 743 | W www.amandadavidson.com
A 1320 Central Park Blvd Suite 200, Fredericksburg, VA 22401
Good morning Amanda - as always a great treatment of your subject both written and video. The unfamiliar buyers thinks that everything is a game of lets make a deal but a good agent will guide them properly.
Good morning Amanda S. Davidson ,
What a great post and so true. Just because the seller countered doesn't mean the buyer has secured the home. Time is of the essence. Until all initials and signatures are obtained and the contract is dated you don't have a binding contract.
Good morning, Amanda - it's not over until it's over. Really "over". Understanding the ramifications of a counter offer is important.
We have a form in Texas called Seller's Invitation To Buyer to Submit New Offer. It's not a counter offer, leaving the seller free to accept an offer from another buyer. But it allows the seller to advise the buyer what would make the offer better and more acceptable to the seller.
Good morning, Amanda... fantastic post and great illustrations with video. So many people just don't understand the negotiating process and risks of waiting. And it works the other way as well. I often tell sellers not to sit on an offer as a buyer might very well move on to another property.
There is more to consider when making an offer and assuming the seller will counter offer anything. I have seen sellers that receive a lowball offer be so upset by it that they don't even want to sell the house to that person when they make a strong offer, haha. Emotions play a huge part in selling a home. I usually try to help people decide on an offer amount that is lower but still has the potential of being accepted without a counter offer.
Recently our seller made a counter-offer to an anxious buyer, whose buyer's agent told her to wait on it. Too bad, because we had 2 better offers and accepted one of them!
Hello Amanda, Counteroffers are always interesting of what both sides want to do. I wish more would listen to our suggesttions. Can I reblog this some time?
Good advice for buyers to be aware of and understand the market so they make a wise and informed offer to begin with.
Hi Amanda S. Davidson, it's a mistake for both the buyers and the sellers to wait. I'm working on one right now, my seller clients won't even respond to the counter, it may be too late by the time they're ready.
Good morning again Amanda. Your post and your video are just terrific. Great job and right on the money. Sheila
I've had three counteroffers this month. They are still out. So different here than in northern VA.
When I was an agent we never had that kind of hot market. However, we did have a transaction much like you outlined. It was for a vacant lot.
The would-be buyer made an offer and the seller countered. The buyer then decided he should wait for his wife to come home from a vacation and talk it over with her.
He saw(?) and signed the clause that gave the seller the right to accept another offer up until the time the buyer presented a signed acceptance of the counter.
Even though we weren't in a hot market, that's exactly what happened, and the buyer was outraged!
He ranted, raved, and screamed that he was going to sue us until I pointed out his signature on that clause.
Good post, Amanda. I wish more buyers (and sellers) understood this.
Great video and post, Amanda! Time is of the essence.
Ultimately it is the buyer’s decision however it is the responsibility of the agent to let buyers know the pros and cons about a low offer.
I always tell the buyers that when they counter the seller, they are opening themselves up to losing the home to someone else. I let the sellers know the same. They almost always think it’s a sales pitch until they lose the property to someone else or buyers walk! Takes one time and then they get it!
Grant Schneider thank you, I agree the let's make a deal comes into play often and in the current market we're in it just doesn't work.
Dorie Dillard CRS GRI ABR perfectly said! I see how fast your listings are selling and they're a perfect example of why time is of the essence!
Michael Jacobs your comment made me smile, thank you.
Lorrie Semler, REALTOR® in the Dallas area. Call/text 972-416-3417 that's a great tool to have. Sure would send a clear message to the buyer of what they need to offer if they want the property.
Nina Hollander you make a great point that it goes for sellers too. I agree 100%, it holds true for both sides!
Brian England I have seen that too, a perfect example of how expecting a counter can be a mistake. Once the seller feels that way it's an uphill road to try to get the parties to find common ground. Thank you for adding to the conversation!
Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400 ouch! I hope that buyer enlists more competent representation to continue the home search.
Will Hamm I do too, I find that those are serious and committed to buying or selling are always open to listen and apply our advice. Those that aren't are, you can lead a horse to water but ... you're always welcome to reblog any of my posts. Thank you!
Nick Vandekar, 610-203-4543 thank you! Your new profile picture is great, very welcoming and genuine. I love it!
You are absolutely correct Amanda. I have had newer agents bring me a less than full price offer on a new listing, they lost. I have had buyers who would not take my advice on a new listing and we lost! Great post.
Beth Atalay I agree, it definitely is. Time is of the essence is in our contract and I always say it's there for a reason. I sure hope your sellers respond soon, that can be stressful.
Sheila Anderson thank you so much.
Rebecca Gaujot, Realtor® how markets differ always fascinates me. It's as hard and as fast as you can go here all the time. There's something to be said for a little bit slower although I think it would take me time to adjust!
Marte Cliff I bet that taught him his lesson. Makes me wonder if he read what he signed or not. A great illustration that even if the market isn't on fire all it takes is another buyer to make an offer and everything changes!
Monica Hill thank you!
Ken Rohn, REALTOR®, GRI® it sure is! Thank you.
Carol Tunis you make a great point that it's often perceived as a sales pitch until it actually happens. It can be a hard lesson to learn!
Chuck Tanner you and me both! It happens and I'm sure will continue to happen but, those who want to secure a home really should avoid it. Thank you!
If the sellers counter is good, take it!
Truer words than ever been said. Great Post! Every buyer should read this Post!
I always read your posts with eager anticipation because you're spot on - and this post re-affirmed that. Buyers in my market should be looking over their shoulders as well as in front and to the sides - another buyer could be lurking anywhere these days and they could be motivated! Reblogging with gratitude!
Great and timely post Amanda S. Davidson! Sadly, I've seen buyers lose the house they really wanted because of the counter offer scenario where they screwed around for a day or more countering back and forth with the seller when a better offer swooped in and knocked them out of the game. While I/we (collectively) try to explain to our buyer clients that all because you submitted an offer, the counter offer process means you're still not under contract, therefore the home is still up for grabs. Many times the deal is lost over something rather small in value; whether the few thousand more off the sales price, or whatever, when in the final analysis it really wouldn't have mattered that much. And while I singled out buyers here, sellers make their own share of mistakes in the counter offer game.
detailed explaination with a lot of truth. It should also be mentioned that buyers should review comps with their agent...before making an offer and counter offer! If comps are reviewed before the initial offer is made, buyer can make a more informed decision along with their agent.
Great information, thank you for sharing!
Amanda, being a strong listing agent, we do see some funny offers, and wonder what they are thinking. Some will NEVER see a counter.
I love M.C. Dwyer's comment - I feel the exact same way! You are always on the same page I am and you obviously are selling real estate - your experiences are always current!
The market now is such that it's truly best to present a slam-dunk Offer and not have to worry about countering! LOL But, boy, if those sellers counter, TAKE IT! You never now when a new buyer will swoop in and woo the seller...or a buyer who had an Offer in and decides to up the ante on their Offer. Take it, take it, TAKE IT!
OH, you and your seller absoultely did what any seller represented by a good agent would have done! They aren't mad at you - they are made because THEY messed up, Amanda!
Nogui Aramburo agreed!
Diana Dahlberg thank you!
M.C. Dwyer thank you so much! Your support and kind comments mean a lot to me. I LOVE your new profile picture, you're beautiful.
Greg Mona I think you make a really important point. It's often over something small in value - spot on advice. A few thousand when we're talking real estate isn't worth losing a home over. Great comment, thank you!
Mary Hutchison, SRES, ABR very true - comps are an important piece of the puzzle.
Mari Velasquez thank you!
Joan Cox we sure do! Our markets have been swayed towards sellers for years and years. They're not giving their homes away because they know there's another buyer in line!
Debe Maxwell, CRS thank you! I love your verbiage - a slam dunk offer. Yes!! Your listings sell like hot cakes and for top dollar, buyers who wait will be left in the cold. There's just too much demand to delay responding or make a less than desirable offer out of the gate. And your comment made me LOL, they're still mad and you're right. They're mad at themselves! Happy Friday!
In our very very much a Sellers market...counters by Buyers are suicide...
This is excellent advice to share. Thanks so much for sharing your experience.
Excellent article that clearly outlines the mistakes that are often made while making counteroffers. Well done, Amanda.
Sally K. & David L. Hanson yes!! Couldn't agree more.
Roy Kelley thank you!
Anita Clark thank you so much!
Amanda I was in a situation this past 40 days where we submitted a great offer and the seller came back with "multiple counter offer" I told my buyer not to think it over but accept it right away... and we got the house because of that... The agent even said the other offers took longer to get accepted hence ours was the winner...Endre
Endre Barath, Jr. a perfect example of not all agents being created equal. You're a true pro and I know your clients are singing your praises!
Hi Amanda:
This is certainly a timely topic in today's market, and buyers can easily miss out if they do not act quickly with regard to a counter, just as they can by waiting too long to submit the initial offer. Just as they should not assume they WILL get a counter, they should not assume others might not be equally interested and respond quickly. Great video with a good example.
Jeff
As markets change, strategies might need to change as well!
this is a great post to share with buyers who may get overly confident and lose that dream house!
I really like your video. You did a great job explaining what took place.
Lise Howe thank you! I hope all is well!
Jill Sackler thank you!
Amanda, you are sorely missed, and hope you are doing well. Miss you lots!
Joan Cox I miss YOU! Your comment made me smile. All is well here, ready for Spring! I love keeping up with you on Facebook, you're busy busy as always! XO
So glad I had a second chance to read this post, Amanda. It rings true for my area (San Francisco and the Silicon Valley) too. All the best, Lottie
Lottie Kendall thank you for stopping by! I hope you're doing well.
Hello Amanda - Joan Cox highlighted this post as part of this month's challenge by Richie Alan Naggar and it's another reason why your presence here on ActiveRain continues to be missed. I know from your FB posts that you are still "winning" in NOVA real estate but it's nice to be able to comment on one of your posts even if it's a repeat of one I have already commented. Take care.
Michael Jacobs it means a lot to me that you took the time to revisit the post and leave a comment. I miss our interaction in the Rain and hope you are doing well and feeling healthy. Hugs.
Hi Amanda, I saw Joan Cox 's post this morning and stopped by to read this execllent post - very true in our market of severe inventory shortage. What a freat explanation of counter offers and the possibility of another offer coming in while the Buyer is preparing their acceptance of the counter. I had missed this post and glad that I read it now.