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Offer and Counteroffer

You’ve found a home that you love, the asking price is in your budget and now it is time to make an offer. If you thought the process that led up to this time was confusing, then you should definitely prepare yourself.

The price you offer depends on a lot of factors, and what many potential homebuyers do not even know is that you could get a counteroffer after your initial offer. Now, this all sounds very confusing, but once you understand the whole offer/counteroffer procedure, it is really not that bewildering after all.

A recent article posted on fool.com, “Offer and counteroffer,” gives some helpful suggestions on one of the last steps in the home buying process.

“You offer $198,000 for a house that has an asking price of $210,000. The seller comes back and says you can have the house for $205,000. What do you do? Much of what you need to know you should already have found out, before your initial offer. There are, though, a few things to keep in mind at this new stage.”

One of the most important things during this time is to make sure your offer is contingent. This means, that in order for it to go through, it depends on a few factors.

“Make sure that your offer is contingent on two items: 1) You're able to obtain adequate financing (if you haven't done so already), and 2) you can pull out if the property doesn't pass muster with your inspector and you and the owner can't come to terms about how to fix the problem.”

If you do not make sure it is contingent on these two things, you could get a house that does not pass an adequate inspection, and you would still be stuck with it.

After you have made the offer, to show that you are really serious about a home, you should give an earnest money deposit.

“The earnest money deposit is a check that you'll give your agent to indicate that you're serious about buying the house. The check will apply toward the sales price if the deal goes through; if not, you get it back and you can tear it up. Ask your agent what's normally given -- it may be something like $3,000 -- and then raise that amount as much as you feel comfortable. It can be as much as 10% of the asking price of the house, or even more. It's up to you.”

Once you make an offer, one of three things will happen. Your offer will be accepted, your offer will be rejected or you will receive a counteroffer. A counteroffer comes from the seller and usually asks you to pay more.

Let’s say you made an offer of $176,000 and the asking price was $181,000. The sellers might give you a counteroffer saying the house is yours for $178,000. You can then give another counteroffer back, or accept theirs.

The most important thing to remember during this stage of the home buying process is to not fall in love with the house, since there is still a chance you may not get it.

“If you find yourself in a state of high anxiety, step back. This may seem like your dream house, but there are going to be others. Really. Your agent should help you with this -- if she feels that they're just asking too much, and that they ought to be coming down, she's probably right. There are many houses in which you can be happy, so stand firm when you've decided that you've reached your upper limit.”

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