Reacting to a Counter-Offer
The offer and counter-offer process on a new home is often called "the art of the deal" or "the art of negotiation". This is because it is a process that requires a certain savvy and finesse to complete successfully. It is highly unlikely that the seller will accept the first offer you throw into the ring. Bottom line, be prepared for the seller to counter, and look at this as an opportunity to get creative.
Your initial offer is expected to be lower than the asking price. The counter offer will most likely be lower than the asking price but higher than your offer. This will go back and forth until you and the seller reach an agreement that entails the seller's bottom line number and your financial ability to purchase.
The seller will expect you to react to his or her counter offer. Rely on your agent (assuming you're using one) to help you through this. The key to successfully reacting to a counter offer is to understand what you're willing to compromise on and what you're not. This is different in every situation, but here are some of the many levers you can use to react to a counter offer:
- Obviously, you can adjust the price you're willing to pay for the home.
- You could offer to rent the home back to the seller if they wish to remain in it longer.
- You could change the close date (earlier or later) if that's important to them.
Remember, this particular part of home-buying is fraught with emotion, and feelings can run amok at times. It is always best to take these steps slowly and think them out carefully.
The seller is looking forward to the sale, dreaming of the big check and what it will bring while you are already deciding on paint colors and the furniture layout. Realize that you are dealing with some of man's most violent passions: need for shelter and large amounts of money. Make sure you can understand and cope with the emotion on both sides of the fence.