When buying a home, making offers and counter offers is a huge part of the game that you and your real estate agent need to play with the sellers. Naturally, this is negated if you feel that the price is fair from the beginning and you come in with an offer right at the asking price. Most buyers, though, start with a lower offer and then get at least one counter from the sellers as the sides negotiate toward a reasonable price in the middle. There are four critical things you must know about this process.
Counter-Offers are About More than the Price
A counter-offer may address things outside of the strict price of the home, such as updates to the property that will be made. For example, if you offered a low price because the home needed a new roof, the seller may agree to replace the roof before you buy if you agree to the full asking price. You’ll then have to determine if that price covers what you anticipated spending on the roof.
Offers can Reduce Up-Front Costs
There are a number of up-front costs when you buy a home, such as the deposit and the closing costs. An offer could address this without asking for a lower price, having the seller–who will soon be getting an influx of capital–cover these costs. For instance, rather than asking for a lower overall price, you could agree to a higher price if the seller will pay $10,000 in closing costs. The seller may have the money to do it, while you can just roll it into your mortgage. This way, you can buy the home with less cash on hand.
Sellers Can Ignore You
You have the freedom to make any offer you want, but it doesn’t mean the seller will even respond. If the home has already sold without your knowledge or if the seller feels your offer is so low that it’s not worth considering, they may ignore your offer and never even counter. The most common reason for this is a significantly low offer, such as offering $200,000 for a home with an asking price of $400,000. The seller won’t feel like it’s worth the time to deal with you since you’re clearly not anywhere close to the asking price and it’s unlikely you’ll come up that much. The seller has no legal obligation to do anything.
Offers and Counter Offers can Expire
If you receive an offer or a counter offer, you must know that there is likely an expiration date on that offer. Make note of this date immediately and act accordingly. This is especially important if there are other people interested in the property. The seller may send you a counter offer and then get other offers from prospective buyers that are better than yours. If you think about your decision for too long and the offer expires, the seller will move quickly to sell the home to someone else.