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 initial enthusiasm the buyer had was gone and they were looking elsewhere.
This is a story that frequently happens across America, in all price ranges. The lesson to be learned 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.
When an offer is not accepted, it voids the original offer and, in this case, 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 terms of the original offer, the buyer is under no obligation to accept it.
Alternatively, if the seller accepts the buyer’s original offer, a contract has been agreed upon based on the terms within. The house is sold and closed 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. If he had accepted the original offer, the home would have been 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. Having the property sold may actually provide peace of mind and convenience that far exceeds the $5,000.
When a seller receives an offer, they are faced with three options.
- 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. Every situation is unique, but compromise has brought buyers and sellers to agreement in many situations.
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.