Life and death decision: Before you counter that offer, consider this!

By
Real Estate Broker/Owner with Riverbend Realty, Cape Girardeau, MO

When a seller chooses to counter-offer rather than accept an offer, he/she kills the original offer. The offer is DEAD, and it was killed by the side who countered it rather than accepting it. That's a powerful message, because sellers and buyers often assume that they are "keeping the deal alive" when they counter. 

Donna and Mike Scott make that point clearly in their article, Are You Presenting Offers as Well as You Should Be? The Scotts provide several strong arguments for why agents should have a serious discussion with sellers before they counter any offer. In fact, though, both sides need to hear that message very clearly. 

I am on the listing side of most of my real estate deals, and I often find myself presenting a counter-offer to other agents, rather than an acceptance. In fact, I find that many sellers are uncomfortable accepting the first offer they get. Buyers whose first offer is accepted may suddenly become dissatisfied, fearing they made an offer that was too high, rather than feeling the sense of jubilation that a ratified contract should generate. 

Of course, accepting the first offer would be much easier and more common if truth were more common in our everyday way of doing real estate. Implicit in the contract offer is the implication that the offered price is what the buyer is willing to pay. Too often, that is not the case. pitcherThe leading volley may be a "throw it on the wall" with little resemblance to an honest negotiation.  

While lowball offers are usually countered nowadays, that has not always been the case. When I first started representing REO sellers, asset managers often ignored lowball offers or rejected them outright. Letting a lowball offer just sit had the effect of keeping it alive until it expired or was withdrawn by the offeror. To counter the offer could have put the sellers at a disadvantage, "showing their hand" to a player who had made an insincere offer and was not, therefore, playing an honest game. Better to let such an offer die its natural death (expire) than to outright kill it by countering it. I see the wisdom of just letting an offer sit, if the converse is killing it via a counter-offer.  

It may be time to rethink the whole negotiation scenario. Countering an offer does not really keep it alive, though that is often how sellers view the process. The buyer is not obligated to continue the negotiation.

Sellers: If it's in the ballpark, catch that offer before it gets away. 

Aside to buyers: If the property is priced fairly for the market, and especially if it is priced aggressively, make your first offer an honest offer. Unlike in a ballgame, you may not be the only hitter out there. You may find yourself out of the game, instead of on base and working your way to home.

Posted by

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If you are looking for a foreclosure in Cape Girardeau, Perry, N. Scott, or Bollinger counties, I am the region's most experienced REO agent. As the area's ONLY Fannie Mae direct listing agent, I list more foreclosure properties than any other agent in this MLS. I am among the few local agents approved to both list and sell HUD properties. Give me a call if you are looking for help with the purchase of a foreclosure property.

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Rainmaker
1,424,384
Sally K. & David L. Hanson
Keller Williams 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Short Sale - CDPE, REDS

Counters are a risk....and even in these times...in some areas...ridiculously low offers are also a risk.

Sep 16, 2011 09:34 PM #1
Rainmaker
265,402
Liz Lockhart
Riverbend Realty, Cape Girardeau, MO - Cape Girardeau, MO
GRI, Cape Girardeau Real Estate

Sally/David~ Thanks!

Sep 16, 2011 09:38 PM #2
Rainer
60,767
Mary Ellen Holleran
Holleran Real Estate - Manhattan, NY
NYC Broker

You make very valid points. I think that sellers are feeling obligated to counter or that they aren't getting the best deal if they don't. I also like that you make a point to the buyers not be to foolish with the offers in the first place. Thanks!

Sep 16, 2011 09:49 PM #3
Rainmaker
265,402
Liz Lockhart
Riverbend Realty, Cape Girardeau, MO - Cape Girardeau, MO
GRI, Cape Girardeau Real Estate

Mary Ellen~It seems to me that this current market fosters insincere offers--that's not fair to either side.

Sep 16, 2011 09:51 PM #4
Anonymous
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Of course, if the Sellers counter and the Buyers walk, the Buyers can still come back later and make another offer.

Sep 20, 2011 12:55 PM #5
Rainmaker
265,402
Liz Lockhart
Riverbend Realty, Cape Girardeau, MO - Cape Girardeau, MO
GRI, Cape Girardeau Real Estate

Russel~ Of course buyers can always come back, but both parties have to know absolutely that a counter cuts the other side loose. Countering is not a way of keeping an offer "alive." Thanks, Russel.

Sep 22, 2011 01:04 AM #6
Rainmaker
181,254
Brenda Whitman
CENTURY 21 Real Estate Center, Inc., Laramie, Wyoming - Laramie, WY
Associate Broker, Laramie, Wyoming

I do think you make a good point - that when an offer is ridiculously low - or not "honest" - to begin with, sellers should feel no pressure or obligation to respond....

Sep 22, 2011 10:50 PM #7
Rainmaker
265,402
Liz Lockhart
Riverbend Realty, Cape Girardeau, MO - Cape Girardeau, MO
GRI, Cape Girardeau Real Estate

Brenda~ I used to see the "let it die on its own" response from Asset Managers more often than I do now, but I do still get it sometimes.

Sep 22, 2011 11:10 PM #8
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Rainmaker
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Liz Lockhart

GRI, Cape Girardeau Real Estate
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