Navigating the complex, dynamic world of real estate transactions requires a thorough understanding of negotiation strategies, particularly when it comes to the delicate art of crafting a counteroffer. Whether you’re a professional cash home buyer pursuing your dream property or a seller aiming to maximize your investment, counteroffering techniques can significantly influence the trajectory and outcome of your transaction. Plus, who doesn’t love saving (or making) more money on a deal? By mastering various strategies such as deploying strategic pricing, utilizing market research, leveraging timing, and maintaining an open line of communication, you can negotiate real estate deals to your benefit.

In this guide, we review tactical strategies homebuyers and sellers can use when making a counteroffer during a real estate negotiation.

Counteroffer Tips for Negotiating as a Buyer

counteroffer in real estate

As a buyer in the real estate market, crafting an effective counteroffer involves a delicate balance between pursuing a good deal and not alienating the seller. Don’t blow up your own opportunity! Every real estate deal is unique.

Typically, buyers have the option to counter between 2% – 12% below the listed price depending on market conditions. It’s important to know the market before nuking your chances to purchase a home with a lowball offer. For example – in a buyer’s market – where supply exceeds demand, a larger counteroffer might be more acceptable.

Calculating the Right Counteroffer Price

negotiate counteroffer in real estate

Start with what is selling in the area (i.e. comparable home sales). What are homes selling for nearby that are similar to the subject property? Knowing the prices like the back of your hand is vital when negotiating and counteroffering. You don’t want to look silly not knowing the home values in the area. Consider the following recent sale factors when writing your counteroffer:

  • Distance – look at comps (comparables) within a .25-mile radius of the home you’re offering to start. Expand the distance if you can’t find any nearby. The closer, the better!
  • Size – comps that are similar size, shape, and layout should carry higher weight than other properties that are much smaller (or larger) than the one you’re trying to buy.
  • Condition – interior condition is huge. This is why companies like Zillow struggle with their home valuations. Zillow’s Zestimates are so inaccurate at times because they don’t consider the interior of the home. Nearby comparable home sales of similar condition carry more weight than ones that are totally different on the inside.
  • Date of Sale – if a property that sold 3 years ago checks all these other boxes, don’t let it carry much weight. First, search for comparable home sales within the past 90 days, and expand from there. Do your best to keep it within 6 months of recent sales.
  • Market Trend – is the real estate market heading up or down? When it’s a seller’s market, don’t expect your low counteroffer to do well. Look at the lay of the land before counteroffering in real estate.

Additionally, taking into consideration the seller’s circumstances can help in making your counteroffer more appealing. Don’t forget the ‘life factors’ that sellers may be dealing with. Demonstrating flexibility on conditions such as closing dates or contingencies can often bridge the gap between your counteroffer and the seller’s expectations. Bend where you can during the negotiation if that becomes the difference between an accepted offer or rejected one.

How Comps Were Financed

Another solid tactic for counteroffering as a buyer is looking at how the nearby comps were financed. If many of them were bought by people with FHA loans, that means they likely put down between 3-5% downpayment in the transaction. These types of buyers usually pay a higher, retail price for homes. If you see a bunch of those nearby, you can counteroffer slightly less.

On the flip side, if you see lots of cash transactions in the area, that could mean there are investors who commonly buy in this area. Companies that purchase houses for cash usually pay less for houses than retail buyers. When you see this during your counteroffer analysis, consider offering more than the cash comps.

Counteroffer Tips for Negotiating as a Seller

As a home seller, the counteroffer strategy is a crucial aspect of your sales toolkit. First, determine how quickly you need to sell your property. If there are dates/deadlines that are sticking points for your timeline, do what you can.

Is it worth it to negotiate and counteroffer as a seller? 99% of the time, yes – as long as you don’t blow up the deal or scare away the homebuyer. Counteroffering gives you a degree of control over the negotiation process, allowing you to set terms that align with your interests. Rather than merely accepting or rejecting an initial offer, counteroffering allows you to potentially make more money. Home sellers can adjust price points, modify timelines, and negotiate contingencies.

Counteroffers during negotiation also send a clear message to potential buyers about your seriousness and intent to sell. This indicates your openness to reach a mutually satisfactory agreement without scaring the buyer away. Real estate counteroffers also open up a dialogue where you can potentially uncover the buyer’s priorities regarding the deal. Use these as leverage to craft a proposal that is both appealing to the buyer and advantageous to you (the seller). Ideally, a counteroffer results in a win-win situation.

Call for Highest and Best

As the seller, you can call for ‘highest and best’. This is a complete power move when negotiating a counteroffer. The highest and best call is when you request all interested buyers to submit their highest and best offers by a certain deadline. Once this date and time come, you will review them and choose one. This counteroffer strategy is especially powerful when sellers list their homes on the market with a realtor and generate multiple offers. The more interest, the more powerful this negotiation strategy is.

Creative Counteroffer Strategy in Real Estate

refuse an offer to purchase your home

PRO TIP: be confident, regardless of which side you’re on. Start with a comprehensive knowledge of your local real estate market – a fact to consider is that homes priced correctly from the start typically sell closer to the asking price. With this insight, pricing your home accurately becomes a compelling tool to negotiate effectively. Counteroffers sometimes fall flat because the market has such high demand that there are enough buyers that will pay the asking price.

Also consider terms like closing dates, contingencies, or repairs when negotiating a real estate transaction. These elements can sweeten your counteroffer without lowering the price. Remember, speed is important – don’t lollygag. Responding promptly to offers shows you’re serious about selling. However, don’t rush, because you don’t want to come off as too eager. Overall, try to find a balance between an acceptable selling price and meeting the buyer’s needs. In the art of negotiation, your counteroffer is the brush stroke that completes the picture of a successful home sale.

Seller Counteroffer Example

Counteroffers are hard to imagine unless you’re sitting at the negotiation table yourself. Let’s create a counteroffer example here.

Imagine you’re a home seller who’s listed a property for $500,000. You receive an initial offer from a potential buyer for $475,000. Instead of accepting this lower offer or rejecting it outright, you decide to make a counteroffer. Based on comparable properties in your area, you know your home is worth close to the asking price, so you decide to counteroffer at $490,000. To make your counteroffer more appealing, you also offer to include the refrigerator, stove, and grill in the sale. For a cherry on top, you propose a flexible closing date according to the buyer’s needs.

Sometimes, counteroffers don’t get accepted. That is a natural part of real estate negotiation. Sellers will reconsider backup offers in this instance. The worst-case scenario is that all backup offer buyers have now moved on to different properties. Speed is essential when negotiating counteroffers to make sure your backups don’t disappear.

Reasons to Accept a Counteroffer

Not all counteroffers are made equal. Certain offers will be cash and others will be accompanied by a mortgage. This seller counteroffer example showed the following points to take home:

  • Counteroffer price stayed near your desired sale price
  • Added value by including appliances in the home sale
  • Flexibility closing date

By staying informed about your property’s value, adding extra incentives, and demonstrating adaptability, you can make a strong counteroffer that maintains your financial objectives while meeting the buyer’s needs. Certain buyers won’t care about appliances, yet won’t purchase a property with a cracked driveway leading up to it. Mirror your buyer’s expectations during negotiation. Create a win-win, and you will win!

Write a Counteroffer in Real Estate with Confidence

Crafting a confident counteroffer in real estate isn’t just about numbers. There is a combination of facts, persuasion, and assertiveness that you must include. Begin by grounding yourself in the reality of your home’s value. Conduct thorough research of comparable homes in your area, knowing your home’s worth down to the last square foot. This factual basis will be your anchor and your shield.

Approach writing a counteroffer as a conversation, not a confrontation. Remove your emotions from the negotiation. Emphasize key selling points of your property in your counteroffer. It’s important to remind the buyer why your home is unique. Don’t let their flame of excitement burn out!

Remember to listen and adapt when you write a counteroffer in real estate. Understand the buyer’s needs and show flexibility where you can, such as on closing dates or included appliances. Ultimately, your goal is to find a win-win solution. The key to writing a counteroffer with confidence lies in your preparation, understanding, and communication.