Why Sellers Make Full-Price Counteroffers

They can be influenced by several circumstances

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It's expected that a seller will often write counteroffers at list price or higher in a seller's market. After all, she knows that there are probably a dozen other buyers out there who will agree to pay full price or better if the one in question won't come up in price or exceed it.

But sellers sometimes also issue counteroffers at full price in buyer's markets. Even though surrounding homes might be selling for less than list price, some homes are worth full price if the pricing is fair. It often comes down to just how much the home is worth. Is it worth list price? Is that market value?

Then there are a few other influences.

Irrational Sellers

Sellers can be irrational. Many sellers think that their home is worth much more than it is. Count the number of MLS listings that sell at their original listed price. You'll find that a large percentage will have had a price reduction.

Buyers Can and Do Accept Full-Price Counteroffers

Sometimes buyers will accept full-price counteroffers. Listing agents know this. They know that buyers who put down an earnest money deposit and take the time to write a purchase offer probably really want the house. They know that buyers have a way of letting their emotions rule and they often fall in love with the property.

The buyer might initially offer less than full price so he can later say to himself, "Hey, at least I tried." But he's more than willing to come up from his starting offer.

Sellers Expect Buyers to Counter Right Back

Sellers expect that buyers will counter their counteroffers. They know it's considered risky to issue a full-price counteroffer to the buyer, and they know that they're taking a chance that the buyer might walk away from offer negotiations. But, like buyers who will offer less than they're willing to pay, sellers will try to get more than the price they will accept.

They, too, want to be able to say that at least they tried.

Sellers Can Have a Change of Heart

Some sellers don't start to consider the fact that they're moving until after an offer is received. Reality doesn't always set in upon signing a listing agreement. Offer presentation is often when seller's remorse tends to set in.

Sellers can feel reluctant to let their homes go at any price so they issue counteroffers in the hope that the buyer will just go away. It saves face. Rather than tell their friends that they got cold feet, they can always say, "Oh, the buyer wouldn't pay our price."

The Home Wasn't on the Market Long Enough

It's not unreasonable for sellers to reject offers by writing a counteroffer for full price when the home has been listed for fewer than 21 days. Ironically, the first offer received is typically the best offer, but sometimes sellers feel that somebody else will come along and offer full price if they hold out for a few more weeks.

Bad Agent Advice

Some listing agents act as though the home is not the seller's but their own. They might feel that it's a personal insult to them if a buyer offers less, so they encourage the seller to make a full-price counteroffer.

The agent might also have a buyer waiting in the wings for the seller to reduce the price. This type of offer would give the agent both sides of the real estate commission, so the agent will do whatever it takes to make the first buyer disappear. It's not right, and it's not legal, but it happens.

Buyers' Response to Full-Price Counteroffers

Many buyers dislike negotiations, but negotiating can often get you a nice deal. Consider all these reasons for a counteroffer then try to figure out which circumstance fits your situation. Always make a second counteroffer. You have nothing to lose and everything to gain.

Continue negotiating until one side gives up. You're always free to write another purchase agreement if the seller doesn't respond to your counteroffer.

Finally, ask for other concessions such as closing cost credits or mortgage buydowns if the buyer simply won't budge from full price.

At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.