Pitfalls of Rejecting a Buyer’s Offer
Ask any real estate agent and they will tell you a similar sad story. The seller, whose home just hit the market, received an offer which was less than the list price, but felt secure their home would sell quickly and countered for more. For whatever reason, the buyer did not continue to negotiate and moved on.
After a week or two and no other offers, the seller instructed the listing agent to contact the buyer’s agent and say that the seller had reconsidered and would now accept their original offer. However, the buyer has already decided to look elsewhere. They no longer have their initial enthusiasm.
This is a story that frequently happens across America, in all price ranges. The tough lesson is that sometimes, the first offer is the best. Consider the rationale, a home is fresh on the market and buyers, especially the ones who have lost bids on other homes, act quickly to hopefully avoid some of the competition.
The original offer becomes void as soon as the seller doesn’t accept it. When the seller makes the buyer a counteroffer; the buyer can accept it, make a counteroffer, or walk away. Even if afterwards, the seller reconsiders and says that he will accept the original terms, the buyer is under no obligation to accept it.
The Value in Accepting an Offer
Alternatively, if the seller accepts the buyer’s original offer, the contract is created based on the terms within. The sale goes through once any contingencies such as financing and/or inspections have been satisfied.
Think of an example where a seller countered for an additional $5,000. Accepting the original offer means the home already sold. In essence, he bought the home back from himself in 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. The value of the peace of mind and convenience of a completed sale often far exceeds the $5,000.
How Should a Seller React to an Offer?
Seller have three options:
- Accept the offer and the sale goes through once anycontingencies are met.
- Reject the buyer’s offer outright and wait for an acceptable offer.
- 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. Every situation is unique, but compromise has brought buyers and sellers to agreement in many situations.
The Advantage of Objectivity
One of the valuable advantages sellers have is their agent’s experience and lack of emotional connection to the property. Your agent can provide objectivity and alternatives for you to consider in making you decisions. Contact Sound Investments today for help to negotiate effectively