“Can’t we just try?” I cannot tell you how many times I’ve heard this from Sellers (and Buyers too!) When selling a Tampa Bay home, you could “try” a counteroffer – but you are taking a risk and there are a few points you should consider first, while attempting to take your emotions out of the negotiations process for a moment.
1. Is the offer fair? If its a fair price and hits your target, what more do you want? Just a little more? Before you get greedy, consider that the buyer may already be at their maximum price, and once you counter an offer, the original offer is considered off the table and no longer valid. Also you may shock or upset the buyer who then may choose not to counter your counter-offer.
2. The Buyer did their Homework, too. If your real estate agent has checked the comparable recent sales in the area, and the offer is in that range – you may not be wise to counter the offer. Because its in the range, the Buyer and the Buyer’s Realtor likely did their homework on recent sales and will likely not overpay for the home, especially if there are others in the area. If the Buyer has written a fair offer based on comparables, it didn’t happen by accident and they may think that if you counter, you’ll be hard to work with for the duration of the transaction as well. I love when I have a listing and the buyer’s agent brings an offer that has been prepared correctly – all spaces on the offer form are filled in, and a pre-approval is attached or proof of funds if the buyer is paying cash. Even better yet (but more rare), I love when an agent includes comparable sales they’ve used to come up with their offer price, or other statistics to support their offer. They are showing you how they came up with that number – that its not just a shot in the dark. Still better is when the offer doesn’t contain a hundred contingencies and they aren’t asking for a repair allowance AND a home warranty, etc. etc. The cleaner the offer, the better for the Seller.
3. You will screw up the Buyer’s enthusiasm about the Home. How long has it been since you bought a home? Remember how excited you were putting in the offer, waiting for an acceptance from the Seller? If you counter, you can really put a kink in that excitement and cause the Buyer to think twice about their decision, and possibly cause them to reconsider if they really want the home THAT much. Even countering by a few thousand can kill that level of enthusiasm.
4. The market (in some price ranges) is still declining and there are a lot of other ‘fish in the sea’. If the buyer is already at the top end of their price range, and feels their offer was fair, if you counter they may just decide to say no thanks and look elsewhere. Simple as that. In some price ranges homes are selling fast and there is little inventory, but in others there are lots of other fish in the sea.
5. A counter is a form of rejection. Some people don’t take rejection well. The buyer may be completely insulted that in our current economy that the Seller would counter such a fair offer. Buying or Selling a home is a very emotional process, and some people have a harder time than others separating a financial decision and their feelings about the home. I’ve seen Sellers counter a buyer’s offer and never get a response. If you feel you must counter, you’d better have some facts and stats to back up your reasoning.
6. How many more mortgage payments will you have if the home sits on the market for another 6 months? Example: Once I had a Seller who’s home was listed at $275,000. We received an offer at $265,000 – a $10K difference. Despite my advice to the contrary, they wanted to counter back at $270,000 – a $5,000 increase over the original offer. The Buyer turned it down and bought another home down the street for $265,000, which was a fair price for the area. The home sat on the market for 6 more months. The Seller’s monthly mortgage payment was $2,000. $2,000 x 6 months = $12,000. Now instead of losing $10,000, they’ve spent $12,000 on mortgage payments and the home’s value has further declined to closer to $255,000. And they could have moved on to North Carolina where their grandchildren were living 6 months sooner.
The moral of the story is listen to your Realtor’s advice when it comes to reviewing an offer. He or she can be a wonderfully unbiased resource who will help you see the transaction as a business transaction, not an emotional game. Is it the first offer that’s come in and the home is new on the market? Statistically, the first offer received is generally the best one when the home is newly listed, but as time goes on, offers generally come in lower because people have the idea that something must be wrong with the home if it didn’t sell right away. Review recent sales in the area to see if the offer is fair, and consider how the buyer might react if you counter. Also consider if its worth the fact that your home could continue to decline in value (depending on the price range/market) if its sits on the market for several more months. Then you will be ready to make an educated decision about whether to counter offer or not.
Unfortunately, even with the market continuing to decline or at least not represent what the seller may have paid for the property, they still refuse to price their properties aggressively. I know of one seller that refused to budge because they felt their property was unique. (It had all the bells and whistles but still the most expensive home in the neighborhood by 70k)