Andrew Wetzel's Musings

May 26, 2017

Accept, Decline or Counter: Navigating the Real Estate Offer

Filed under: Uncategorized — awetzel @ 3:19 PM

The psychology of a real estate transaction is the same as any other situation where two parties, often with different motivations, are trying to agree on something whether it is as basic as deciding where to eat or more complicated and personal. It is a “dance” that could end with two happy parties or regret. Those participating in the dance need to know their role even if the other side has not memorized the script.

A real estate sale generally starts with a seller putting their property on the market. Is their asking price a ceiling or a floor from which to start negotiating? That depends on the market as well as the seller’s attachment to reality. It is a starting point nontheless and a buyer has to know the terrain. Ideally, if priced for location, features and conditions, a house has a good chance of attracting attention.

Agents and buyers will review the property information, discuss their thoughts, perhaps drive through the area and, if buyer interest remains, an appointment will be scheduled to see how close the marketing and reality match.

If there is interest, the buyer’s agent may contact the seller’s agent to ask some probing questions such as when is the seller looking to settle, if the asking price is flexible, whether there are there any other offers and anything else that might grant the buyer leverage or at least provide information to digest.

The buyer’s agent will put together the purchase offer which typically consists of an offer price, specific terms of the offer (including contingencies that allow the buyer to re-evaluate their decision) and proof that the buyer is “ready, willing and able” to make it all happen. Then the dance begins ….

The offer is presented to the seller’s agent typically by email which means that they do not have to meet face-to-face. Too often, unfortunately, offers are emailed without a call from the buyer’s agent causing the unopened offer to sit in the listing agent’s inbox with numerous other unknown and usually unwanted messages. The buyer and their agent wait for a response. Sometimes the process accelerates rapidly; other times, not so much.

Once the listing agent presents the details to their client, the seller generally has three options:

  • Accept the offer as presented. An offer is an “option” that may be “exercised” within a specified time frame. After that, it expires but it can still be negotiated if the buyer remains interested;
  • Decline the offer. This is best accomplished by actually telling the buyer agent why the seller is declining the offer; some seller may tell their agents not to respond at all. This is a tactic that has risks in that it may end all discussion;
  • Offer a “counterproposal” to close a gap between the asking and the offered price. Once an offer is “countered,” the original offer is technically off the table and cannot be relied upon without the acceptance of the buyer. Some buyers will accept the seller’s response, some may counter their counter, some may stand by their original offer and some may elect to walk away. This is “the dance”. The longer the process drags on, the more likely the process will die. Neither party should assume there is still interest nor should they assume the discussion is over without confirming the other side’s intent.

Sellers and their agent must know the possibilities and act accordingly. I have met many sellers who wish they had accepted an offer they rejected or countered. At the time they felt there would be another “counter” or additional interest when there was none. Getting an offer soon after a property is listed does not mean anything more than someone was interested at the time. They may be the only one who will make an offer at the current price. There are also buyers who wish they had continued to negotiate.

Negotiating, especially for something as expensive and potentially emotional as a house, requires diligence, patience and an understanding of what our clients want.

We are the experts and our clients may not get a “second chance” or another chance. What happens is largely dependent on how the client and their agent perceive the market and how to make it work.

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