Young man making counter offer to bid on home for sale.

How To Prepare A Real Estate Counter Offer

January 29, 2024 6-minute read

Author: Melissa Brock

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Home buying consists of many steps, including making an offer on a property you’re interested in purchasing. If the seller comes back to renegotiate, it’s important to remember that you’re not alone when working through their counteroffer. Your real estate agent or REALTOR® can act as a go-between during these negotiations.

Let’s dive into what you need to know about counteroffers in real estate and how they work.

What Is A Counter Offer In Real Estate?

Counteroffers become part of the home buying and selling process after buyers make an offer on a house and the seller wants to change their deal to fit their sale goals better.

In the home buying process, a counteroffer is an offer made in response to the original bid. When a seller gets an offer, they can choose to accept, reject or counter. In return, if the seller makes a counter, a buyer can also choose to accept, reject or counter it.

Home sellers and buyers alike use this tactic to negotiate the best price and terms possible.

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How Does Making A Counteroffer On A House Work?

Several scenarios may warrant a counteroffer, and the countering process looks a little different for home buyers and sellers.

As A Seller

A seller can counter a buyer’s initial offer to change the purchase price or increase the earnest money deposit.

For example, let’s say you’re the seller and you list your home for $220,000. However, a buyer offers you $200,000 instead. Maybe you're still interested in signing a contract with that buyer for your home. If so, you make a counteroffer of $210,000. At this point, the buyer may agree to that price, or the buyer may counter in response to your counteroffer. To make your offer stronger, you may want to provide comps, or comparable homes in the area, to show why that price is reasonable.

Sellers can also make counteroffers for other reasons, such as changing the closing date or contingency periods. Sellers will typically communicate the terms of the counteroffer through their listing agent or real estate agent, and may also put an expiration date on the counteroffer to speed along the home sale process.

As A Buyer

A buyer can also counter a seller’s counteroffer, as we’ve mentioned in the previous example. There are no limits to the number of counters you can submit as a buyer.

Home buyers first create an offer that may be below the asking price when they want to negotiate the house price presented by the home seller. The home seller may counter with a higher price than the buyer’s original offer, but lower than the original asking price. If the buyer thinks the price is still high, they could counter it.

Let’s take a look at our previous example, only this time, you’re the buyer. A seller lists a home for $220,000, and you, the buyer, offer $200,000. If the seller comes back with a $210,000 counteroffer, you could accept the deal or counter $205,000.

In another scenario, you might counter because a home inspection reveals issues with a property, such as a cracked foundation. You can ask the seller to take the price down to $200,000 if you find out that fixing the foundation issues will cost $20,000.

Buyers resend the counteroffer terms to the home seller through their agent.

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3 Tips For Making A Counter Offer

Let’s take a look at a few negotiating strategies for those hoping to make a counteroffer that the other party will accept.

The tactics in the following list could even be used to win a bidding war:

1. For sellers: Pay more of the share of closing costs. Sellers can offer to pay some of the buyer’s closing costs. Closing costs usually run 3% – 6% of the mortgage loan amount, so take a look at your budget to determine if you have enough wiggle room to help with the closing costs.

2. For buyers: Increase the earnest money deposit. The earnest money deposit is an important tool in a real estate transaction because it communicates to a seller that you're serious about buying. Increasing the earnest money deposit can help make your offer more attractive. Normally, people put down about 1% – 3% of the sale price. Adding more could sweeten the deal for the seller.

3. For sellers: Exclude or add personal property. Personal property, such as furniture and appliances, can be included in a home sale negotiation which could help you strike a deal with the buyer.

What If Your Counteroffer Is Rejected?

If your counteroffer is rejected, don’t give up just yet – you still have two options. You can either walk away from the deal or create a different counteroffer. You’ll typically have 1 – 3 days to prepare and send the new counteroffer, if that’s what you’d like to do.

Keep in mind that once you make a counteroffer, the original offer (or, in some cases, the original counteroffer) is off the table. If your counteroffer is rejected, you usually cannot go back and accept the previous offer.

It’s important to collaborate with your real estate agent to improve your offer by tailoring it to the other party’s motivations or weighing your pros and cons. It’s through this process that you’ll determine whether you should look for a new home or a new buyer.

When Should You Accept A Seller’s Counteroffer?

As the buyer, when should you decide to accept a seller’s counteroffer? An offer may only go on the table for 24 hours or less in a hot real estate market. It’s important to know where the housing market stands – whether your area is in a seller’s or buyer’s market – to get a head start on the competition.

Keep in mind that, if you’re countering, you’re not yet in a contract. The seller could get another (better) offer while you're still going back and forth. The buyer and seller can work through negotiations until reaching an agreement, but it becomes legally binding when they sign the offer.

You should review the following factors before you accept a seller’s counteroffer:

  • Contingencies, which refer to requirements that must be met for the sale to go through
  • Sale timeline
  • Whether the seller’s counteroffer fits into your budget
  • Whether you understand all parts of the offer

Once the counteroffer has been accepted, the buyer and seller then sign a contract. The buyer must secure financing, and the seller must complete any repairs stated in the agreement.

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Real Estate Counteroffer FAQs

Let’s answer some common questions about real estate counteroffers.

Can sellers make counteroffers with multiple buyers?

State laws vary on whether a seller can participate in more than one sale negotiation at a time. You should ask your real estate agent about the laws in your particular state. Sellers should not make multiple offers at once, and not doing so benefits all parties involved.

When should I walk away from a real estate negotiation?

Buyers or sellers should not feel obligated to continue negotiations if they don’t feel comfortable with the sale price or agree with the terms of the counteroffer, such as waiving the home inspection contingency.

If you’re the buyer, you should recognize the following red flags as potential signs to walk away from a real estate negotiation:

  • The appraisal comes in lower than what you’ve offered.
  • The home inspection reveals some major problems with the home.
  • Someone else lays claim during a title search.
  • It’ll cost a lot of money to insure.
  • The deed restrictions are difficult for you to navigate.

Should I counter a lowball offer?

When a seller gets a lowball offer, or an unreasonably low offer on the house, it’s generally a good idea to counter. For the seller, the act of countering an offer tells the buyer that they’re still interested in selling to them if they improve the terms of their deal. For your reference, there are many reasons a buyer may make a lowball offer, including:

  • They don’t believe the house is worth the listing price.
  • They’re uniformed about the market.
  • They’re not serious about buying the home.
  • They’re justifying the cost of repairs, renovations or improvements.
  • They’re testing the seller.

How much should I counteroffer on a house?

When crafting your counteroffer on a house, it’s important to consult with your real estate agent to make sure that the offer will make sense for you and the seller. Consider factors like home value, current price, earnest money deposit and contingencies in order to make a counteroffer the seller will accept.

The Bottom Line: Prepare To Negotiate With A Counteroffer

While buyers and sellers alike often benefit from accepting a counteroffer, sometimes a counter works to one party’s advantage more than another’s. As a buyer, understanding these concepts can help you negotiate more effectively and stay within your budget.

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Melissa Brock.

Melissa Brock

Melissa Brock is a freelance writer and editor who writes about higher education, trading, investing, personal finance, cryptocurrency, mortgages and insurance. Melissa also writes SEO-driven blog copy for independent educational consultants and runs her website, College Money Tips, to help families navigate the college journey. She spent 12 years in the admission office at her alma mater.