It's common for home buyers, especially first-time home buyers, to make a counteroffer mistake. Some buyers believe it's OK to try to negotiate the sales price of a home because they think sellers expect them to counter the offer. Sometimes buyer's agents, who purportedly represent the buyer and often are required legally to follow fiduciary, will disclose to the listing agent that the buyers will accept a counteroffer.
That sort of bad behavior is telling the listing agent the buyers are not serious about the sales price they offered and that they will pay more. Generally, that is privileged information that the listing agent is not entitled to hear. But if the listing agent gets wind of that notion, you can bet the agent will pass on that little bit of insight to the seller. It gives the seller the upper hand in negotiations, and the buyer's agent did a grave injustice to the buyer, regardless of good intentions.
It is not the seller's concern whether the buyer's agent has violated her fiduciary to her client, and the seller will undoubtedly use that information to the seller's advantage. Depending on how long the home has been on the market, the seller might choose to counter the offer to the original sales price. That results in a counteroffer mistake for the buyer and not what the buyer expected.
- It may not be a good idea to negotiate on homes that have recently listed, since new listings rarely sell for less when they sell within the first week.
- Most counteroffers take a while to process, and while you're negotiating another buyer could tour the home and write a full-price offer.
- Don't believe an agent who tells you the seller can always counteroffer—even if the seller does, you can still lose if the home is still getting showings.
Don't Make This Counteroffer Mistake for a New Home Listing
Days on the market don't always make a difference in the sales price, and many homes that have been on the market for three months or longer eventually sell at list price. In fact, in 2019, buyers typically bought their homes for 98% of the asking price, regardless of time on the market.
However, homes that are a relatively new listing will rarely sell at less than list price when they sell within the first week. It means the price was at fair market value. It is why it's not always a good idea to try to negotiate and expect the seller to counter the offer on a new listing, but there is another very good reason not to negotiate, which is often overlooked.
The reason is most counteroffers take a while to process. And, even if these negotiations take just a few days, that can feel like an eternity to the 40% of home buyers who would rank the process of purchasing a home as the top source of stress in modern life.
Then, when you consider that this precious time could open up a window of opportunity for another buyer to tour the home and write a full-price offer, perhaps with better financing and terms as well, the stress surrounding the situation gets even further elevated.
If you're the buyer who hopes to buy a home under these circumstances, you are probably not the only buyer in the marketplace, and your tastes in a home are probably not that different from any other home buyer. You can be assured that if you love the home, another buyer will, too.
It's a terrible counteroffer mistake to give the seller too much time to find another buyer who will pay more.
Process and Time Involved
- Listing agent and seller discuss the terms of the offer over the phone or via email.
- Seller authorizes the listing agent to draw a counteroffer, and the agent might very well suggest other aspects of the offer to counter as well. Things that both parties might have let ride if the offer was accepted as written, but since a counter is desired, they conclude that they may as well include those items, too.
- The listing agent sends the counter to the offer to the seller for signature, who has since gone out to dinner and does not check her email until the following morning.
- Upon receipt of the signed counter from the seller, the listing agent emails the counteroffer to the buyer's agent, who might be attending her son's soccer game for the afternoon.
- Later in the afternoon, the buyer's agent calls the buyer to discuss the terms of the counteroffer and whether the buyer should accept the terms and conditions in the counteroffer or if the buyer should issue a second counteroffer.
- More often than not, the buyer accepts the terms of the counteroffer.
- This is about the time that the listing agent notifies the buyer's agent that another offer has arrived, a better offer, and the seller is withdrawing the counter to the offer.
Too much time has passed in this scenario. Twenty-four hours is plenty of time for another buyer to write a full-price offer, a tactic the first buyer neglected to do when presented with the opportunity because the buyer had hoped to negotiate. The buyer probably wanted to "save" $5,000 or $10,000 by offering less and did not view this strategy as a counteroffer mistake. If the seller has no intention of accepting a lower offer, there are no "savings" to be gained.
Do not believe an agent who tells you the seller can always counter the offer. Even if the seller does, you can still lose the house if the home is still getting showings.