Did You Really Expect a Counter Offer?

Real Estate Broker Owner with Island Style Realty Inc. RB-19250

Purchase ContractWhile teaching a class on purchase contract negotiations, I used an example of a home seller who rejected an offer.  The buyer's agent was upset that they didn't counter.

It was an appropriately priced home, that showed well.  The buyer sent in an offer for $100,000 less than the asking price.  There was no cover letter, no pre-approval letter and the contract looked like it was written by a 3rd grader.  No indication they were serious or would be able to close.  So the seller rejected the offer.

The buyer's agent responded immediately and demanded and explanation as to why they didn't counter.

Here is where the buyer and their agent went wrong:

  1. The price was so far from anything the seller would accept, they had no common ground.  They were not going to meet them in the middle or anything close to it.
  2. The contract was not executable.  In the rare case that the seller considered accepting the price, they could not sign the contract.  They would be forced to counter to clean up the mistakes.  The counter would require a re-write of the entire contract to clean up mistakes.  If they have to counter to clean up the contract, the price is on the table too.  This mistake weakens the buyer's hand in a negotiation.
  3. The buyer did not persuade the seller they were serious.
  4. The buyer's agent showed a lack of professionalism and convinced the other side this would be a painful at best escrow, if it ever got there.
  5. The buyer did not make the case that they could close if they got to escrow.
  6. Bottom line - The buyer did not give the seller any real basis for a negotiation.

When you make an offer on a home you need to do a few things.

  1. Present a clean, executable contract.  If they sign it, you are going to escrow.  Be sure they are not forced to counter, to clean up your contract.  If they do, everything is on the table.
  2. Demonstrate that if they accept your offer, they will be dealing with a professional and not an idiot.
  3. If you offer less than the seller wants to accept, make your offer strong and attractive in every other way.  Make them think twice before taking the risk of losing your buyer by countering.
  4. Here's the bottom line.  You need to make the case that if they take their home off the market, you will bring it to closing.

When presenting an offer, make the other side feel comfortable dealing with you.  If they feel confident you can close, they may be a little more negotiable.  Solid buyers do not grow on trees.  Flaky buyers and flaky agents do not get the same level of respect.

I just added a follow-up blog post to this one: Not All Realtors® Agree - Rejection vs. Counter Offer

Posted by



Randy L. Prothero, REALTOR®

Principal Broker, ABR, AHWD, CRS, e-PRO, GRI, MRP, SFR

Island Style Realty Inc.

Team Leader - "The Prothero Group"

Randy Prothero is well established as an expert in working with military / VA clients and first time home buyers.  His home seller's (listing) campaign is one of the most aggressive marketing programs in the area.

Based out of Mililani, Hawaii. Randy services the island of Oahu (Honolulu County) Performs mediations and ombudsman services for the Board of Realtors.  To improve overall professionalism in his area Randy also offers classes for real estate agents. 

www.HawaiiRandy.comOahu (Honolulu County) Property Search  Hawaii Military Relocations


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Comments 236 New Comment

Randy Prothero
Hawaii REALTOR, (808) 384-5645
Island Style Realty Inc.

Christine - That is exactly what I teach in my contract negotiating class.  Make the offer so clean that the seller might accept a little less for fear of putting it at risk with a counter.

November 18, 2010 02:44 AM
Vito Boscaino
Parker Realty Associates

It truly is amazing how often common sense and professionalism are lacking in this industry.  Negotiating and positioning are the two critically important areas where agents can truly differentiate themselves and add value.  Yet there are so many agents who believe that opening the front door to a property is their big value add in a transaction, and treat the rest of the deal as a nusiance.   

November 18, 2010 08:53 AM
Randy Prothero
Hawaii REALTOR, (808) 384-5645
Island Style Realty Inc.

Vito - That is so true.  Those who are the true professionals will always rise to the top.

November 18, 2010 05:03 PM
Kelsey Barklow
423/948-9154, Marne Drinnon 423/202-2277
Evans & Evans Real Estate

Great post. How about the offer that comes in on an outdated Purchase and Sale Agreement (2009) and a counter offer on a form from 2004!

December 28, 2010 10:09 AM
Randy Prothero
Hawaii REALTOR, (808) 384-5645
Island Style Realty Inc.

Kelsey and Marne - I get some that are on forms much older than that.

December 31, 2010 07:39 PM

Randy Prothero

Hawaii REALTOR, (808) 384-5645
Ask me for a free valuation of your Oahu Home.
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