Sellers Ask - How Do I Make a Counter-Offer
Buyers often want to know about getting counter offer from the seller, especially when they are making an offer that is less than list price.
You might want to read more about how to make an offer using the Residential Purchase Offer or RPA used here in California if you are not familiar with it.
How to make a counter offer is a common question for sellers, too, as they know they might not get the offer they want and would like to negotiate something better. There's a lot to know about how to sell a house!
There are 3 general types of Counter Offers:
- a counter offer from the buyer to the seller
- a counter offer from the seller to the buyer
- and a Multiple Counter Offer from the seller to multiple buyers.
The counter offer is made on the Counter Offer Form, a standard form from the California Association of Realtors (C.A.R.). These forms were recently revised to indicate more clearly the particular type of counter offer. A seller will submit a Seller Counter Offer No. 1 (for the initial counter, and additional ones depending on how complex negotiations get) or Form SCO. If the seller receives multiple offers and wishes to counter them, the seller uses Form SMCO (the seller can make different counters to each buyer if desired, depending on the offers received and terms and conditions).
A seller can make a simple counter to the buyer’s offer, a different purchase price for example. Or the seller’s counter may be complex with additions or changes to terms and conditions, clarification of various items in the buyer’s offer, and/or deletion of certain items.
The counter offer must be signed by the seller to be valid, and can include an expiration date if it makes sense. You should discuss the details of how to make a counter offer, on what terms, and when, with your listing agent.
Once received by the other party, the buyer can elect to accept the seller’s counter as stated, or to accept it but subject to a counter offer submitted by the buyer using the Buyer Counter Offer form (form BCO), with other changes to the contract. If accepted, the contract is complete and you will open escrow (read about Escrow Instructions).
However, if the buyer decides to counter the seller the process continues back and forth until the parties reach agreement. In some cases the buyer and seller cannot or will not reach agreement and one or the other might decline to negotiate further.
Some negotiations can take place quickly, and in some cases the seller will accept the buyer’s offer and not counter it. In other case the process can go back and forth one or more times depending on the issues and the parties involved. The risk, of course, is that while negotiating another offer can come in to the seller that will potentially complicate things.
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