Just about any real estate agent will tell you a quite similar sad story. One that pretty much goes like the following: The seller’s home just hit the market, they received an offer which was less than the list price, and then felt secure enough to counter for a higher amount. For whatever reason, the buyer didn’t continue to negotiate and moved on.
Then, about a week or two go by and no other offers come up to the plate. The seller then instructed the listing agent to contact the buyer’s agent and state that the seller had reconsidered and would now accept that offer. However, the initial enthusiasm is gone from the buyer, and he/she is already looking elsewhere.
This story happens so frequently across America – amongst all price ranges. Ready for the “lesson learned”? The lesson which is learned is simply that sometimes the first offer is best. You have to consider the rationale – a home is fresh on the market, fresh to buyers – and especially to buyers who have lost bids on other homes and decide to act quickly in the hopes of avoiding some of the competition.
When an offer is not accepted, the original offer is void – and really in this case, the seller makes the buyer a counteroffer. The buyer can decide to accept that counteroffer or simply walk away. Even if the seller decides afterwards to reconsider and accept the terms of the original offer, the buyer is under no obligation whatsoever to accept it. And, in most cases, they do not.
If the seller does accept the buyer’s original offer, a contract has now been agreed upon based on the terms within. The house is sold and closed upon once any contingencies such as financing and/or inspections have been discussed and satisfied.
Here’s an example – a seller counters for an additional $5,000. If he/she had accepted the original offer, the home would have been sold. So in essence, he/she bought the home back from himself/herself in the high hopes of making an extra $5,000.
To put it in perspective, on a $350,000 home, the additional $5,000 would have been 1.4% of the value. As an investor, the risk involved in having to continue to own the property may not be justified by such a low rate of return. Having the property sold may actually provide peace of mind and convenience that far exceeds the $5,000.
A seller is faced essentially with three options once they receive an offer:
- They can accept the offer and the house is sold considering the contingencies can be met.
- The seller can reject the buyer’s offer outright and wait for an acceptable offer.
- The seller can counteroffer the buyer with terms that are agreeable to the seller.
Many agents feel that if the offer is not acceptable, the counteroffer alternative presents a greater likelihood of negotiating to an acceptable agreement between the parties. Each and every situation is unique, however compromise has brought buyers and sellers to agreement in many situations.
An agent’s expertise, experience and lack of emotional connection to the property can be one of the best and valuable advantages you can have as a seller. Be sure to work with an agent who can provide you with objectivity and alternatives for you to consider when you are making your decisions.
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