Why Sellers Make Full-Price Counteroffers

They can be influenced by several circumstances

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A seller will probably write a counter offer at list price or higher when it's a seller's market. These sellers won't budge on price because they know that there are probably a dozen other buyers out there who will agree to pay full price or even more. But sellers sometimes issue counteroffers at full price even in buyer's markets for any number of reasons.

Some homes are worth the full asking price if the pricing is fair, even when surrounding homes might be selling for less than the list price. It often comes down to just how much the home is worth, and a few other influences.

Irrational Sellers

Sellers can be irrational. Many think that their homes are worth much more than they actually are. Just count the number of MLS listings that sell at their original listing price and you'll find that a large percentage of them have had price reductions.

Buyers Do Accept Full-Price Counteroffers

Sometimes buyers will accept full-price counteroffers, and listing agents know this. A buyer who puts down an earnest money deposit and takes the time to write a purchase offer probably really wants the house. Buyers have a way of letting their emotions rule, and it's not uncommon for them to fall in love with must-have properties.

Buyers might initially offer less than full price so they can later say, "Hey, at least I tried," but they're often more than willing to come up from their starting offers. In fact, many buyers believe that they should open with a low offer, that it's expected protocol.

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 counter offer to a buyer, and they know that they're taking a chance that the buyer might walk away from offer negotiations, but they'll try to get more than the price they'll accept because they expect the buyer will come right back with another offer.

It's no different from buyers who offer less than they're actually willing to pay. Sellers also want to be able to say that at least they tried.

When a buyer counters a seller's counteroffer, it acts as a rejection of the seller's counteroffer. But it at least opens a route of communication.

Sellers Can Have a Change of Heart

Some sellers don't start to consider the fact that they're actually moving out of their homes until after they actually receive an offer. Then reality caves in. It doesn't always set in upon signing a listing agreement.

Offer presentation often kicks off seller's remorse. Sellers can feel reluctant to let their homes go at any price, so they issue high counteroffers in the hope that the buyer will just go away.

It saves face. They can always say, "The buyer wouldn't pay our price," rather than admit that they got cold feet.

The Home Wasn't on the Market Long Enough

It's not unreasonable for sellers to reject offers by writing counteroffers for full price when the home has been listed for fewer than 21 days. Ironically, the first offer received is typically the best, 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 their own, not the seller's. 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 counter offer.

The agent might also have another buyer in the wings who's waiting 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' Responses to Full-Price Counteroffers

Many buyers dislike negotiating, but it can often get you a nice deal. Consider all the potential 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.

You might also consider asking for other concessions, such as closing cost credits or mortgage buydowns, if the seller 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.