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Offers and Counteroffers: How to Set the Right Price

When an offer is presented, the seller may decide to respond with a counteroffer or not to respond at all. In the latest case, no news is bad news, as the seller may not feel the offer deserves a response. On the other hand, if the seller responds with a counteroffer, you can be assured the seller is taking your offer seriously, however, either the price or terms or both are not to the seller’s liking. The counteroffer will give details of this. For example, if the price is the issue and you offered a low-ball bid, the seller will respond with a higher price and the same holds true for the terms. If you offer a low ball bid due to the fact that similar homes in the area have sold for the lower than asking price and you have evidence of this, provide the evidence with the offer. If you believe you are in the seller’s market and there are other offers for the home you are bidding on, you may want to offer close to the asking price. You may even want to offer a little more than the asking price, however, do remember what you calculated you could afford. In a bidding war it is often a good strategy for the buyer and agent to have discussed multiple offers so the agent can present different option with the buyer approval. This strategy is generally used if it is a strong seller’s market and there is a bidding war being conducted by multiple brokers.

In an aggressive market some of the other negotiating strategies include:

  • Making an open ended offer.
    For example, offering a percent or a specific amount of money higher than the highest bid.
  • Allowing the seller to choose the closing date.
  • Remove as many contingencies as you can.
    The first to go is the financing contingency, which means you are pre approved by a lender and have a letter of commitment. Some people feel this is the same as having cash. The next contingency to remove should probably be the home inspection. Again, it depends on how much you want the home and the type of market you are in.
  • Offer the asking price or higher.
    Nothing gets a sellers attention more than an offer containing the numbers he or she was hoping to see.

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