The toughest part of buying a house isn't finding the ideal place or locking down financing. It's actually making the offer -- not just the monetary part, mind you, but deciding what to include and what to leave out.
Do you want to offer what the seller is asking, or do you want to offer more? Then again, depending on market conditions, you might want to offer less and see if the seller is willing to bargain.
Beyond that, though, you must decide if you want to protect yourself by making the sale dependent on, say, a satisfactory home inspection, an appraisal, or even your ability to secure a mortgage at a specified rate.
Maybe you want to make the deal contingent on the sale of your current house or your ability to break your lease. You also might want to include something about timing: the closing date or preferred move-in date, for example. And you might consider asking the seller to pay at least a portion of your closing costs.
In real estate, everything is negotiable. Your agent should help you decide how to proceed with these and other decisions. But perhaps the most important consideration for buyers is how you think the seller will respond.
The seller could accept your offer as written -- "the best of all considerations," says Montana broker Kat Palmiotti of eXp Realty -- or they could reject it without blinking an eye.
Most often, though, they will counter with an offer of their own -- maybe at a somewhat higher price than you offered, but changing nothing else. Or perhaps they'll accept your price but change other elements. Even if they change everything, the good news is that by countering your offer, the seller is saying they are willing to bargain.
On the flip side, though, if there is too much back-and-forth, the deal can get bogged down until it simply dissolves without any kind of resolution. Or, while you and the seller are trading proposals, another buyer can swoop in with a better offer and take the house out from under you.
Parrying with a seller is "part of the game people play" in real estate, says retired agent Carol Williams in Wenatchee, Washington. "But it's not without risk."
Some agents, like Doug Dawes of Keller Williams Realty in Topsfield, Massachusetts, believe that there can never be too many counteroffers. After all, another counter means there may still be some wiggle room.
Donald Payne of Vision Realty in Columbus, Ohio, tells his clients, "Never let a contract die unless it's simply ridiculous."
But negotiations sometimes go awry. One time, Anna Kruchten of the Phoenix Property Shoppe was up to six counteroffers when the seller became so frustrated that he started crossing out more items in the buyer's latest offer than he had in previous ones. The buyer walked, and the "hardheaded" seller waited "quite some time" before he found another buyer.
Chuck Willman of Utah Homes in Alpine can top that, though. He has seen 14 counteroffers -- a battle that ended with just $1,500 separating the parties on a $1.1 million transaction and neither side willing to budge any further. The buyer and seller were both so angry, Willman recalls, that they wouldn't even accept an agent's offer to make up the difference out of his commission.
"It was probably for the better," he says. "The two parties had such resentment that an accepted offer would have been just the first of many disagreements."
Mike McCann, a Nebraska farmland broker, once worked with a buyer who insisted on countering "despite my warnings." And sure enough, a stronger offer came in, and the buyer lost out. "That was an expensive lesson," he says.
Some buyers sit on a counteroffer from the seller, whether to decide how to proceed or to put a little extra pressure on the seller. But in doing so, warns Amanda Davidson of eXp Realty in Alexandria, Virginia, they put themselves in jeopardy of losing the deal.
Losing the deal while bargaining with the seller happens more often than you might think.
"Time opens the opportunity for another buyer to tour the home and write an offer," says Willman. "The odds of you being the only buyers ... interested in the home are low -- nonexistent, in some markets."
And it works the same way with sellers. "I often tell sellers not to sit on an offer, as a buyer might very well move on to another property," says Nina Hollander of Coldwell Banker in Charlotte, North Carolina.
Buyers and sellers alike should rely on their agents' expertise as they guide them through negotiations. And as you go through the process, keep your emotions in check. Remember, the house you are buying or selling is still essentially a product, and the goal is to come to an agreement that both sides can live with.
To protect yourself, though, make sure there is no confusion about what you are agreeing to. Read all the clauses in the contract carefully before you initial them. And if you've gone back and forth several times, consider rewriting the agreement into a brand-new, clean contract.