Offer and Counteroffer: The Procedure for Offers
When you’re dealing through an agent, offers and counteroffers are presented in written form. You make an offer and the agent, in consultation, writes it out on a sales agreement. Then the agent presents the offer to the other party and, presumably, argues your case for you.
If the offer is accepted, fine. You’ve got a deal. However, I suspect that in better than 70 percent of the cases, the buyer’s original offer is not accepted, but instead the seller counteroffers. The agent will then come back and explain the seller’s position, may even argue for accepting the seller’s counteroffer, or may make suggestions about countering the counter.
Offer and Counteroffer
1. The buyer makes an offer that the agent writes up. The offer usually has a time limit for acceptance.
2. As soon as possible, the agent presents the offer to the seller.
3. The seller accepts the offer exactly as written up, or rejects it. An offer that’s rejected is effectively dead. A counter does not resurrect a dead offer—it’s actually a new offer.
4. If the seller rejects the offer, the seller may choose to counter. The counter will presumably be for less than the seller originally wanted, but more than the buyer offered. Usually the counter also has a time limit for acceptance.
Remember the concept of a package. The counter may, for example, maintain the seller’s original price, but offer better terms or time. (It is possible for the seller to counter with exactly the originally desired price and terms—a “take it or leave it” counter.)
5. The buyer may now accept or reject the seller’s offer. The buyer, however, is under no obligation to accept any counteroffer from the seller.
6. If the buyer rejects the seller’s counter, he or she may choose to make another counteroffer.
7. The offering and counteroffering can continue almost indefinitely. There are no limits to the number of times the negotiations can go back and forth.
Remember, the agent is now negotiating for you. If the agent is skilled and determined, you have a much better chance of getting any offer accepted. That’s why it’s important to pick agents at the onset whom you believe are good negotiators, not just friendly faces.
If you’re going to counter, it’s usually a good idea to make the counter on the same document as the original offer. The reason is psychological. When the counter is on the same document, even though the other party knows that his or her original offer was rejected, it makes it seem like the same deal is still being negotiated. The same holds true for counter counters. Better to wear out the paper on a sales agreement than lose the deal.